Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation

Stock-Based Compensation

9.  Stock-Based Compensation

As of December 31, 2011, there were 830,000 shares of common stock available to be issued under the 2008 Stock Incentive Plan, as amended (the “2008 Plan”). The 2011 Stock Incentive Plan (the “2011 Plan”) became effective upon closing of the Company’s initial public offering in April 2012. Upon effectiveness of the 2011 Plan, no further awards were available to be issued under the 2008 Plan. The 2011 Plan is administered by the Board of Directors of the Company and permits the Company to grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The 2011 Plan increased the total number of shares of common stock available to be issued by 3.5 million.

During the six months ended June 30, 2011 and 2012, the Company issued options to purchase 1.9 million and 0.3 million shares of common stock, respectively. These options generally vest over a three-year period for employees and immediately for directors. After the closing of the Company’s initial public offering in April 2012, options granted to directors will be issued with a one-year vesting period. During the six months ended June 30, 2011, the Company also issued options to purchase 0.1 million shares of common stock to non-employees. The assumptions used to determine the fair value of options granted to non-employees were consistent with those used for employee grants.

The weighted-average assumptions used to estimate the fair value of options at the date of grant for the three and six months ended June 30, 2011 and 2012 were as follows:

	Three months ended June 30,		Six months ended June 30,
	2011	2012	2011	2012
Risk-free interest rate	2.5%	0.89-1.11%	2.5%	0.89-1.11%
Expected dividend yield	0%	0%	0%	0%
Expected term	5.0-5.9 years	5.8-5.9 years	5.0-5.9 years	5.8-5.9 years
Expected volatility	73%	71-72%	73%	71-72%

The Company recognized stock-based compensation expense as follows for the three and six months ended June 30, 2011 and 2012:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2011		2012		2011		2012
Employee awards:
Research and development	$	933	$	945	$	1,633	$	1,853
General and administrative	1,775		432		2,048		862
Stock-based compensation for employee awards	2,708		1,377		3,681		2,715
Stock-based compensation for non-employee awards	56		33		103		34
Total stock-based compensation	$	2,764	$	1,410	$	3,784	$	2,749

The following table summarizes stock option activity during the six months ended June 30, 2012:

(in thousands, except per share amounts)	Number of shares		Weighted average exercise price		Aggregate intrinsic value
Outstanding, December 31, 2011	17,617		$	2.56	$	74,329
Granted	294		$	6.73
Exercised	(378	)	$	2.24
Forfeited	(78	)	$	3.42
Outstanding, June 30, 2012	17,455		$	2.63	$	81,093
Exercisable, June 30, 2012	14,529		$	2.27	$	72,740
Vested and expected to vest, June 30, 2012	17,304		$	2.61	$	80,782

The aggregate intrinsic value was calculated as the difference between the exercise price of the stock options and the fair value of the underlying common stock as of the respective balance sheet date.