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Stockholders' Equity
 9 Months Ended
Dec. 31, 2011
Stockholders' Equity
4. Stockholders’ Equity

Common Stock and Warrants

At December 31, 2011, the Company has reserved 2,840,909 shares of common stock pursuant to the Plans, as described below. On April 6, 2007, the Company issued warrants to an individual at Scripps to purchase up to 150,000 shares of common stock at $0.01 per share, as discussed in Note 11. The warrants have a seven-year term and are exercisable based on performance criteria as detailed in the warrant agreement. At this time, the Company does not believe that the performance criteria are probable of being achieved in the near future.

Shareholder Rights Plan

In March 2003, the Company adopted a Shareholder Rights Agreement (the “Rights Agreement”). Under the Rights Agreement, the Company distributed certain rights to acquire shares of the Company’s Series A junior participating preferred stock (the “Rights”) as a dividend for each share of common stock held of record as of March 17, 2003. Each share of common stock issued after the March 17, 2003 record date had an attached Right. Under certain conditions involving an acquisition by any person or group of 15% or more of the common stock (20% in the case of a certain stockholder) (“the 15% holder”), each Right permitted the holder (other than the 15% holder) to purchase common stock having a value equal to twice the exercise price of the Right, upon payment of the exercise price of the Right. In addition, in the event of certain business combinations after an acquisition by a person or group of 15% or more of the common stock (20% in the case of a certain stockholder), each Right entitled the holder (other than the 15% holder) to receive, upon payment of the exercise price, common stock having a value equal to twice the exercise price of the Right. The Rights had no voting privileges and, unless and until they became exercisable, were attached to, and automatically traded with, the Company’s common stock. The Rights original termination date was upon the earlier of the date of their redemption or March 2013. On September 8, 2011, the Company amended the Rights Agreement to accelerate the expiration date to September 8, 2011, effectively terminating the Rights Agreement on September 8, 2011.

Stock-Based Compensation

For the nine-month fiscal year ended December 31, 2011 and the nine-month period ended December 31, 2010, we recorded stock-based compensation expense of approximately $730,000 and $748,000, respectively, for stock options granted under the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan”). For the fiscal years ended March 31, 2011 and 2010, we recorded stock-based compensation expense of approximately $1,003,000 and $1,007,000, respectively, for stock options granted under the 2001 Plan.

The 2001 Plan allows for the granting of incentive and nonqualified options and restricted stock and other equity awards to purchase shares of common stock. Incentive options granted to employees under the 2001 Plan generally vest over a four to five-year period, with 20%-25% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to non-employee directors and consultants under the 2001 Plan generally vest over one year. Options granted under the 2001 Plan have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At December 31, 2011, options to purchase 2,823,400 shares were outstanding under the 2001 Plan and the 1992 Repligen Corporation Stock Option Plan (collectively with the 2001 Plan, the “Plans”). At December 31, 2011, 17,509 shares were available for future grant under the 2001 Plan.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of share-based awards on the grant date. The fair value of share-based awards granted during the nine-month fiscal year ended December 31, 2011 and the nine-month period ended December 31, 2010 and during the fiscal years ended March 31, 2011 and 2010 were calculated using the following estimated weighted-average assumptions:

 

     Nine Months ended December 31,    Years ended March 31,
     2011    2010    2011    2010

Expected term (years)

    6.5    6.5    6.5    6.5

Volatility

    53.09% - 55.76%    57.58% - 63.60%    55.94% - 63.60%    58.12% - 65.14%

Risk-free interest rate

    1.25% - 2.38%    1.81% - 2.62%    1.81% - 2.83%    2.54% - 3.14%

Expected dividend yield

    —    —    —    —

The Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award, and recognizes it as expense over the employee’s requisite service period on a straight-line basis. The Company has no awards with market or performance conditions. The Company recognizes stock-based compensation expense based upon options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted by an amount of estimated forfeitures.

Information regarding option activity for the nine-month fiscal year ended December 31, 2011 under the Plans is summarized below:

 

     Options
Outstanding		     Weighted-
Average
Exercise
Price Per
Share		      Weighted-
Average
Remaining
Contractual
Term
(in years)		      Aggregate
Intrinsic
Value		  

Options outstanding at April 1, 2011

      2,580,600      $ 4.15         

Granted

      350,500        3.35         

Exercised

      (2,500 )      0.01         

Forfeited/cancelled

      (105,200 )      4.11         
  

 

 

          

Options outstanding at December 31, 2011

      2,823,400      $ 4.05         6.19       $ 631,199   
  

 

 

          

Options exercisable at December 31, 2011

      1,734,900      $ 4.08         4.83       $ 503,919   
  

 

 

          

Vested and expected to vest at December 31, 2011 (1)

      2,674,669      $ 4.05         6.08       $ 621,540   
  

 

 

          

 

(1) This represents the number of vested options as of December 31, 2011 plus the number of unvested options expected to vest as of December 31, 2011 based on the unvested outstanding options at December 31, 2011 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on December 31, 2011 of $3.47 and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on December 31, 2011.

The weighted average grant date fair value of options granted during the nine-month fiscal year ended December 31, 2011 and the nine-month period ended December 31, 2010 was $1.89 and $1.95, respectively. The weighted average grant date fair value of options granted during the fiscal years ended March 31, 2011 and 2010 was $2.11 and $2.71, respectively. The total fair value of stock options that vested during the nine-month fiscal year ended December 31, 2011 and the nine-month period ended December 31, 2010 was approximately $804,000 and $817,000, respectively. The total fair value of stock options that vested during the fiscal years ended March 31, 2011 and 2010 was approximately $993,000 and $1,067,000, respectively.

 

As of December 31, 2011, there was $1,764,675 of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 2.86 years. The Company expects 939,769 unvested options to vest over the next five years.