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Stockholders' Equity
 3 Months Ended
Mar. 31, 2013
Stockholders' Equity

8. Stockholders’ Equity

Option activity under our stock-based compensation plans during the three months ended March 31, 2013 was as follows (in thousands except per share amounts):

 

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

Balance as of December 31, 2012

     13,806      $ 3.38       

Options granted

     2,981        2.96       

Options exercised

     (57 )      1.50       

Options cancelled:

        

Options forfeited (unvested)

     (361 )      3.64       

Options cancelled (vested)

     (21 )      2.85       
 

 

 

    

 

 

      

Balance as of March 31 2013

     16,348      $ 3.31        7.18      $ 2,086   
 

 

 

    

 

 

    

 

 

    

 

 

  

Vested and expected to vest as of March 31, 2013

     15,089      $ 3.32        7.03      $ 2,065   
 

 

 

    

 

 

    

 

 

    

 

 

  

Exercisable as of March 31, 2013

     8,625      $ 3.41        5.88      $ 1,814   
 

 

 

    

 

 

    

 

 

    

 

 

  

Restricted stock unit activity under our stock-based compensation plans during the three months ended March 31, 2013 was as follows (in thousands except per share amounts):

 

     Number
of
Shares		     Weighted-Average
Grant-Date  Fair
Value		  

Balance as of December 31, 2012

      1,755      $ 4.23   

Granted

      —          —     

Vested

      —          —     

Forfeited or expired

      (30 )      4.22   
  

 

 

    

 

 

  

Balance as of March 31, 2013

      1,725      $ 4.23   
  

 

 

    

 

 

  

The aggregate intrinsic value of the restricted stock units outstanding as of March 31, 2013, based on our stock price on that date, was $3.8 million.

As of March 31, 2013, approximately 2,600,000 shares underlying stock options and restricted stock units awards with performance-based vesting criteria were outstanding.

Under our stock-based compensation plans, option awards generally vest over a four-year period contingent upon continuous service and expire ten years from the date of grant (or earlier upon termination of continuous service). The fair value-based measurement of each option is estimated on the date of grant using the Black-Scholes option valuation model. The fair value-based measurements and weighted-average assumptions used in the calculations of these measurements are as follows:

 

     Stock Options     Employee Stock Purchase Plan  
     Three Months Ended
March 31,		     Three Months Ended
March 31,		  
     2013     2012     2013     2012  

Weighted-average fair value

    $ 2.70      $ 3.27      $ 1.46      $ 3.15   

Risk-free interest rate

      1.1 %      0.5 %      0.2 %      0.2 % 

Expected life (in years)

      5.8        4.0        1.3        1.3   

Volatility

      1.4        1.6        0.7        1.6   

Expected volatility is based on historical volatility of our stock price. The expected life of options granted is estimated based on historical option exercise and employee termination data, giving consideration to options that have not yet completed a full life cycle. Our senior management, who hold a majority of the options outstanding, and other employees were grouped and considered separately for valuation purposes. The expected life of the options for senior management is six years and for other employees five and a half years. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is zero percent for all years and is based on our history and expectation of dividend payouts.

Compensation expense is based on awards ultimately expected to vest and reflects estimated forfeitures. For equity awards with time-based vesting, the fair value-based measurement is amortized to expense on a straight-line basis over the vesting periods. For equity awards with performance-based vesting criteria, the fair value-based measurement is amortized to expense over the remaining vesting period commencing when the achievement of the vesting criteria becomes probable.

We recognized stock-based compensation expense of $4.3 million and $2.3 million for the three months ended March 31, 2013 and 2012, respectively. Stock-based compensation during the three months ended March 31, 2013 included $2.1 million of expense for accelerated vesting of stock options related to management continuity and severance arrangements with certain employees and executive officers.

 

The components of stock-based compensation expense were (in thousands):

 

     Three Months Ended
March 31,		  
     2013      2012  

Research and development

    $ 1,323       $ 803   

General and administrative

      2,943         1,519   
  

 

 

     

 

 

  

Total

    $ 4,266       $ 2,322   
  

 

 

     

 

 

  

As of March 31, 2013, the total unrecognized compensation cost related to non-vested equity awards including all awards with time-based vesting amounted to $16.6 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.75 years. Additionally, as of March 31, 2013, the total unrecognized compensation cost related to equity awards with performance-based vesting criteria not deemed probable of vesting amounted to $6.8 million.

Employee Stock Purchase Plan

As of March 31, 2013, 996,000 shares have been reserved and approved for issuance under the Purchase Plan, subject to adjustment for a stock split, any future stock dividend or other similar change in our common stock or capital structure. To date, employees have acquired 761,222 shares of our common stock under the Purchase Plan including 62,498 shares during the three months ended March 31, 2013. As of March 31, 2013, 234,778 shares of our common stock remained available for future purchases.

Warrants

As of March 31, 2013, warrants to purchase an aggregate of approximately 12,700,000 shares of our common stock were outstanding. The warrants are exercisable at a weighted average price of $1.96 per share. During the three months ended March 31, 2012, warrants were exercised to purchase an aggregate of approximately 1,300,000 shares of our common stock. There were no warrants exercised during the three months ended March 31, 2013.