12.

Stock Option Plan

The Company adopted the 2003 Stock Option Plan, or the 2003 Plan, in 2003, under which the Company initially reserved for the issuance of 1,252,436 shares of its common stock. The 2003 Plan was approved by the Company’s stockholders on December 21, 2004. On June 23, 2010, June 4, 2009, April 25, 2007 and April 26, 2006, the dates of the Company’s annual stockholders meetings during such years, the Company’s stockholders approved amendments to the 2003 Plan increasing the total shares reserved by 3,000,000, 2,000,000, 2,000,000 and 750,000 shares, respectively, for a total of 9,002,436 shares. Upon approval of the 2012 Equity Incentive Plan, no additional stock awards may be granted under the 2003 Plan.

The Company adopted the 2012 Equity Incentive Plan, or the 2012 Plan, in May 2012, under which the Company initially reserved for the issuance of 4,000,000 shares of its common stock. The 2012 Plan was approved by the Company’s stockholders on June 20, 2012.

As of December 31, 2013, the Company had outstanding options issued to its employees to purchase up to 5,834,408 shares of the Company’s common stock, to its directors to purchase up to 912,645 shares of the Company’s common stock, as well as options to consultants in connection with services rendered to purchase up to 250 shares of the Company’s common stock.

Stock options to employees generally vest ratably over three years and have contractual terms of ten years. Stock options to directors generally vest ratably over two or three years and have contractual terms of ten years. Stock options are valued using the Black-Scholes option pricing model and compensation is recognized based on such fair value over the period of vesting on a straight-line basis. The Company has also reserved an aggregate of 45,823 additional shares for issuance under options granted outside of the 2003 Stock Option Plan. The options were granted to The University of Texas M. D. Anderson Cancer Center and DEKK-Tec, Inc. (see Note 8 to the financial statements, Commitments and Contingencies). During the year ended December 31, 2007, the Company recorded a $120 thousand stock compensation expense in connection with the Company achieving a predetermined development milestone, which triggered the vesting of 25,111 of the options granted outside of the 2003 Stock Option Plan. The 25,111 options were exercised on August 13, 2007. Proceeds from this exercise amounted to $50 thousand and the intrinsic value of these options amounted to $104 thousand. During 2010, the Company recorded an expense of $27 thousand when 6,904 DEKK-Tec stock options vested upon achieving Phase 3 milestones.

Proceeds from the 2013, 2012, and 2011 exercises amounted to $956 thousand, $30 thousand, and $980 thousand, respectively. The intrinsic value of these options amounted to $1.4 million, $11 thousand and $2.5 million for years ended December 31, 2013, 2012 and 2011, respectively.

Transactions under the Plan for the years ending December 31, 2013, 2012, and 2011 were 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, 2010		4,566,935		$	2.82
Granted		1,894,300			5.65
Exercised		(479,666	)		2.04
Cancelled		(843,083	)		5.01

Outstanding, December 31, 2011		5,138,486			4.08
Granted		2,309,650			4.36
Exercised		(8,300	)		3.61
Cancelled		(292,533	)		5.70

Outstanding, December 31, 2012		7,147,303			4.11
Granted		2,649,900			3.28
Exercised		(570,168	)		1.68
Cancelled		(2,479,732	)		4.58

Outstanding, December 31, 2013		6,747,303		$	3.81		7.17	$	5,339

Vested and unvested expected to vest at December 31, 2013		6,711,969		$	4.01		5.03	$	5,311

Options exercisable, December 31, 2013		3,471,935		$	4.01		5.03	$	2,654

Options exercisable, December 31, 2012		3,683,786		$	3.56		5.28	$	3,972

Options available for future grant		416,964

At December 31, 2013, total unrecognized compensation costs related to non-vested stock options outstanding amounted to $8.5 million. The cost is expected to be recognized over a weighted-average period of 1.84 years.

Restricted Stock

In December 2013, the Company issued 75,272 shares of restricted stock to its non-employee directors, which vested in their entirety on the one year anniversary of the grant date. In January, February and May 2012, the Company issued 101,500, 43,802 and 25,000 shares of restricted stock to employees, which vested ratably in annual installments over three years, respectively, commencing on the first anniversary of the grant date. In December 2012, the Company also issued 87,730 shares of restricted stock to its non-employee directors, which vested ratably in annual installments over three years, commencing on the first anniversary of the grant date. In July and December 2011, the Company issued 50,000 and 720,675 shares of restricted stock to employees, which vested ratably in annual installments over three years, respectively, commencing on the first anniversary of the grant date. In January and December 2011, the Company also issued 25,000 and 52,731 shares of restricted stock to its non-employee directors, which vested in their entirety on the one year anniversary of the grant date and ratably in annual installments over three years, respectively, commencing on the first anniversary of the grant date. In March and April 2010, the Company issued 90,000 and 25,000 shares of restricted stock to its non-employee directors, respectively, all of which vested in their entirety on the one year anniversary of the grant date. In December 2009, the Company issued 347,500 shares of restricted stock to employees and 45,000 shares of restricted stock to its non-employee directors, which vested ratably in annual installments over three and two years, respectively, commencing on the first anniversary of the grant date. In September 2009, the Company issued 828,000 shares of restricted stock to employees and 180,000 shares of restricted stock to its board of directors, all of which vested in their entireties on the one year anniversary of the grant date. In December 2008, the Company issued 396,500 shares of restricted stock to employees and 90,000 shares of restricted stock to its board of directors, all of which vested in December 2009. Also, in January 2008, the Company issued 100,000 shares of restricted stock to one employee which vested ratably over a three-year period. In 2007, the Company issued 70,000 shares of restricted stock to several employees which vested in December 2008. During the years ended December 31, 2013, 2012 and 2011, $1.2 million, $1.7 million, and $635 thousand of compensation expense was recognized, respectively.

In January, March, May and December 2013, the Company repurchased 52,018, 5,400, 2,623, and 56,683 shares at average prices of $4.28, $4.50, $1.65 and $4.37 per share, respectively, to cover payroll taxes. In July and December 2012, the Company repurchased 15,740 and 107,413 shares at $6.06 and $4.19 per share, respectively, to cover payroll taxes. In January and December 2011, the Company repurchased 15,190 shares and 44,369 shares at $5.14 and $4.41 per share, respectively, to cover payroll taxes. In January, September and December 2010, the Company repurchased 15,283 shares, 349,710 shares and 51,116 shares at $3.10, $3.95 and $4.66 per share, respectively, to cover payroll taxes. In December 2009, the Company repurchased 103,823 shares of vested restricted stock from employees at $3.66 per share to cover payroll taxes. A summary of the status of non-vested restricted stock as of December 31, 2013, 2012 and 2011 is as follows:


	Number of Shares			Weighted-Average Grant Date Fair Value
Non-vested, December 31, 2010		348,753		$	2.30
Granted		848,406			4.52
Vested		(229,586	)		3.56
Cancelled		(16,667	)		2.85

Non-vested, December 31, 2011		950,906			4.34
Granted		258,032			4.39
Vested		(351,829	)		4.32
Cancelled		(123,370	)		4.34

Non-vested, December 31, 2012		733,739			4.37
Granted		75,272			4.34
Vested		(292,399	)		4.31
Cancelled		(163,747	)		4.42

Non-vested, December 31, 2013		352,865		$	4.38

As of December 31, 2013, there was $1.3 million of total unrecognized stock-based compensation expense related to non-vested restricted stock arrangements. The expense is expected to be recognized over a weighted-average period of 1.45 years.