Share-Based Compensation

6 Months Ended

Jun. 30, 2013

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

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

4. Share-Based Compensation

The Company has adopted incentive and nonqualified stock option plans for executive, scientific and administrative personnel of the Company as well as outside directors and consultants. In May 2013, the Company’s shareholders approved an amendment to the 2011 Long-Term Incentive Plan, increasing the number of shares reserved for issuance from 1,730,000 to 4,230,000 shares of common stock to be available for grants and awards. As of June30, 2013, there are 3,491,252 shares issuable under options previously granted and currently outstanding, with exercise prices ranging from $1.75 to $60.39. In 2012, the Company awarded options to two officers, a portion of which is subject to certain performance conditions and market conditions. Options granted under the plans generally vest over periods varying from immediately to three years, are not transferable and generally expire ten years from the date of grant. As of June30, 2013, 1,210,876 shares remained available for grant under the Company’s 2011 Long-Term Incentive Plan.

The Company records compensation expense associated with stock options and other equity-based compensation in accordance with provisions of authoritative guidance. Compensation costs are recognized based on a straight-line method over the requisite service period, which is generally the option vesting term of up to three years. Awards with performance conditions will be expensed if it is probable that the performance condition will be achieved. As of June 30, 2013, no expense has been recorded for share awards with performance conditions.

The Company’s net loss for the six months ended June 30, 2013 and 2012 includes compensation expense of $1,164,578 and $468,353, respectively, related to the Company’s share-based compensation awards. The compensation expense related to the Company’s share-based compensation arrangements is recorded as components of general and administrative expense and research and development expense, as follows:

	SIX MONTH PERIOD
	ENDED
	JUNE 30,
	2013		2012
Research and development	$	465,353	$	92,126
General and administrative		699,225		376,227
Share-based compensation expense	$	1,164,578	$	468,353
Net share-based compensation expense, per common share:
Basic and diluted	$	0.05	$	0.03

The Company uses the Black-Scholes-Merton valuation model to estimate the fair value of stock options granted to employees. Option valuation models, including Black-Scholes-Merton, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant date fair value of an award.

Following are the weighted-average assumptions used in valuing the stock options granted during the six-month periods ended June 30, 2013 and 2012:

	SIX MONTH PERIOD ENDED JUNE 30,
	2013		2012
Expected volatility	105.37	%	102.01	%
Risk-free interest rate	1.01	%	0.92	%
Expected term of option	5.76 years		5.63 years
Forfeiture rate*	5.00	%	5.00	%
Expected dividend yield	0.00	%	0.00	%

* - Authoritative guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. During the six- month periods ended June 30, 2013 and 2012, forfeitures were estimated at 5%.

The weighted average fair value of stock options granted during the six-month periods ended June 30, 2013 and 2012 was $1.43 and $1.60, respectively.

A summary of the Company’s stock option plans and of changes in options outstanding under the plans for the six months ended June 30, 2013 is as follows:

	Number of Options		Weighted Average Exercise Price
Outstanding at January 1, 2013		1,636,544	$	5.07
Granted		1,934,500	$	1.79
Exercised		(3,817)	$	1.88
Expired		(75,975)	$	25.43
Forfeited		-	$	-
Outstanding at June 30, 2013		3,491,252	$	2.79
Vested and expected to vest at June 30, 2013		3,396,030	$	2.82
Exercisable at June 30, 2013		1,586,809	$	3.90

Cash received from option exercises under all share-based payment arrangements for the three and six months ended June 30, 2013 was $0 and $7,190, respectively. Cash received from option exercises for the three and six months ended June 30, 2012 was $0 and $1,999, respectively.