Note 5 - Share Based Compensation

9 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

(5)    Share-Based Compensation

A summary of stock option grants outstanding as of March 31, 2013, and the related activity during the nine months ended March 31, 2013, is presented below:

	Number of Options
Options	Biota Holdings  Limited			Nabi			Biota Pharmaceuticals, Inc.
Outstanding at June 30, 2012		6,182,853			3,665,201
Granted		686,365			-
Exercised		(413,335	)		-
Forfeited		-			(20,000	)
Expired		(601	)		(591,485	)
		6,455,282			3,053,716
Adjustment for consolidation of shares (reverse stock split)					(2,544,716	)
Vested and exercised upon merger		(6,455,282	)		-
Balance on November 8, 2012 (date of merger)		-			508,918
Post-merger transactions:
Granted		-			-			931,590
Expired		-			(16,979	)		-
Outstanding at March 31, 2013		-			491,939			931,590
Exercisable at March 31, 2013		-			491,939			-

On November 8, 2012, and in connection with the merger and based upon stockholder approval, Nabi’s board of directors approved a 1:6 reverse stock split of existing Nabi shares, which reduced the number of shares of common stock reserved for outstanding stock options to 508,918. The exercise price of all outstanding stock options as of that date have been adjusted to reflect the reverse stock split and are now between $11.22 and $99.94 per share, with terms expiring from March, 2014 to January, 2019.

Biota Holdings Limited had outstanding stock options to purchase 6,455,282 shares of its common stock at September 30, 2012. Upon approval of the merger with Nabi by the Supreme Court of Victoria on October 26, 2012, all of these outstanding stock options vested, resulting in the issuance of 4,639,104 shares of common stock and the vesting of 1,816,178 shares held by Biota Holdings Limited for this purpose. The related expense of $1.1 million associated with the issuance of shares of common stock has been recognized as a general and administrative expense in the consolidated statement of operations of Biota Holdings Limited.

On November 12, 2012, the Company granted options to purchase 931,590 shares of common stock at an exercise price of $4.07. The grant becomes exercisable in three equal installments on the first, second and third anniversary of the grant date. The options have a 10 year term. The Company estimated the fair value of each stock option on the date of grant, using the Black-Scholes option-pricing formula, to be $2.72 using the following key assumptions:

Expected Term: The expected term represents the period over which the share-based awards are expected to be outstanding based on the Company’s historical experience. The Company estimated an expected term of 5 years.

Risk-Free Interest Rate: The Company used a risk-free rate of 0.65%, based upon the risk-free interest rate used in the assumptions on the implied yield currently available on the U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the stock option award.

Expected volatility: The Company used an expected volatility factor of 83.84%, based on the historical price of its common stock over the most recent period commensurate with the expected term of the stock option award.

Expected Dividend Yield: The Company does not intend to pay any cash dividends on common stock for the foreseeable future. Accordingly, it assumed a dividend yield of zero.

The Company amortizes share-based compensation expense over the option’s vesting period using the straight-line attribution approach. For the three and nine month periods ended March 31, 2013, the Company recognized approximately $0.1 million and $0.3 million respectively of share-based compensation expense related to the issuance of stock option grants.

A summary of outstanding restricted stock awards as of March 31, 2013, and the related activity during the nine month period ending March 31, 2013 is presented below:

	Number of Awards
Awards	Nabi			Biota Pharmaceuticals, Inc.
Unvested at June 30, 2012		196,254
Vested and shares issued		(196,254	)
Balance on November 8, 2012 (date of merger)		-
Post-merger transactions:
Granted		-			214,983
Vested		-			(71,661	)
Outstanding at March 31, 2013	Nil				143,322

On November 12, 2012, the Company granted 214,983 of restricted stock awards with an average fair value of $4.07. The restricted shares vest over three equal installments: upon 90 days, and on the first and second anniversaries of the grant date. For the three month and nine month periods ended March 31, 2013, the Company recognized approximately $0.2 million and $0.3 million of share-based compensation expense related to the issuance of restricted stock units.

As of March 31, 2013, there was $2.7 million of unrecognized compensation expense related to unvested share-based compensation arrangements. This expense is expected to be recognized over the next two years as the shares vest.