Stockholders' Equity

6 Months Ended

Dec. 31, 2012

Stockholders' Equity

6. Stockholders’ Equity

In August 2012, the Company completed a registered direct offering of 2,494,419 shares of its common stock and warrants to purchase 623,605 shares of its common stock to institutional investors for gross proceeds of $5.4 million. The shares and warrants were sold in units, each unit consisting of one share together with 0.25 of one warrant, at a negotiated price of $2.15 per unit. Each whole warrant has an exercise price of $2.50 per share and a five-year term, provided, however, that the warrants are not exercisable for a period of six months from date of issuance. Placement agent fees and other share issue costs totaled $694,000.

Warrants to Purchase Common Shares

The following table provides a reconciliation of all US$ warrants for the six months ended December 31, 2012 and 2011:

	Six Months Ended December 31,
	2012					2011
	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price
Balance at beginning of period		2,064,710		$	6.17		7,614,748		$	7.35
Issued		623,605			2.50		—			—
Expired		(1,512,210	)		6.60		(2,814,701	)		8.76
Balance at end of period		1,176,105		$	3.67		4,800,047		$	6.53
Exercisable at end of period		552,500		$	5.00		4,800,047		$	6.53

At December 31, 2012, the remaining term of outstanding US$ warrants ranged from 3.1 to 4.6 years, representing a weighted average period of 3.9 years.

At December 31, 2011, the Company had 205,479 warrants outstanding denominated in A$ with an exercise price of A$7.68 ($7.81). These warrants expired unexercised in July 2012. During the six months ended December 31, 2012 and 2011, there were no A$-denominated warrants issued or exercised.

2008 Incentive Plan

The Company’s 2008 Incentive Plan (the “2008 Plan”) provides for the issuance of a maximum of 4,841,255 shares of common stock in satisfaction of stock-based awards to directors, executives, employees and consultants.

The following table provides a reconciliation of stock option activity under the 2008 Plan for the six months ended December 31, 2012:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
					(in years)		(in thousands)
Outstanding at July 1, 2012		3,053,355	$	3.10
Granted		616,760		2.14
Outstanding at December 31, 2012		3,670,115	$	2.94		7.37	$	50
Outstanding at December 31, 2012 - vested or unvested and expected to vest		3,592,370	$	2.93		7.35	$	50
Exercisable at December 31, 2012		2,293,860	$	2.78		6.62	$	50

Option grants for the six months ended December 31, 2012 consisted of 411,760 options with ratable annual vesting over 4 years, 60,000 options to a non-executive director with ratable annual vesting over 3 years and 145,000 options to non-executive directors with 1-year cliff vesting. The weighted-average grant date fair value of these option grants was $1.29 per share. A total of 625,826 options vested during the six months ended December 31, 2012. All option grants have a 10-year contractual life.

In determining the grant date fair value of options, the Company uses the Black-Scholes option pricing model. The Company calculated the Black-Scholes value of options awarded during the six months ended December 31, 2012 based on the following key assumptions:

Expected term (in years)	5.50 - 6.25
Stock volatility	94.7% - 97.8	%
Risk-free interest rate	0.81% - 0.98	%
Expected dividends	0	%

Employee Share Option Plan

The Company’s Employee Share Option Plan (the “Plan”) provided for the issuance of non-qualified stock options to eligible employees and directors. As of June 30, 2008, no further options could be granted under the Plan. Options outstanding under the Plan had vesting periods ranging from immediate vesting to 3-year graded vesting, a contractual life of five years and were denominated in A$.

During the three months ended September 30, 2012, the last remaining 112,500 options under the Plan expired unexercised.

Stock-Based Compensation Expense

The Company’s statements of operations included total compensation expense from stock-based payment awards for the six months ended December 31, 2012 and 2011, as follows:

	Three Months Ended December 31,				Six Months Ended December 31,
	2012		2011		2012		2011
	(In thousands)
Compensation expense included in:
Research and development	$	127	$	122	$	306	$	269
General and administrative		136		43		300		373
	$	263	$	165	$	606	$	642

At December 31, 2012, there was approximately $1.4 million of unrecognized compensation expense related to unvested options under the 2008 Plan, which is expected to be recognized as expense over a weighted average period of 1.7 years.