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Stock- based Compensation
 12 Months Ended
Dec. 31, 2012
Stock-based Compensation [Abstract]  
Stock-based Compensation

(9) Stock-based Compensation

Stock Plans

The Company’s equity incentive plan was amended, as approved by stockholders on June 25, 2009, to (i) change the name of the plan from the Amended and Restated Nuvelo, Inc. 2004 Equity Incentive Plan to the Amended and Restated ARCA biopharma, Inc. 2004 Equity Incentive Plan, or the Equity Plan, (ii) increase the maximum number of shares issuable under the plan, revise the formula for determining the maximum number of shares issuable under the plan and implement new share usage rules; and (iii) adjust the award limitations for stock options and stock appreciation rights. As a result of such amendment, the maximum number of shares issuable under the Equity Plan was increased by 54,387 shares.

The Equity Plan provides for the granting of stock options (including indexed options), stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, performance shares, performance units and deferred stock units. Under the Equity Plan, awards may be granted to employees, directors and consultants of ARCA, except for incentive stock options, which may be granted only to employees. As of December 31, 2012, options to purchase 67,630 shares were outstanding under the Equity Plan, and 80,255 shares were reserved for future awards.

In general, the Equity Plan authorizes the grant of stock options that vest at rates set by the Board of Directors or the Compensation Committee thereof. Generally, stock options granted by ARCA under the equity incentive plans become exercisable ratably for a period of three to four years from the date of grant and have a maximum term of ten years. The exercise prices of stock options under the equity incentive plan generally meet the following criteria: the exercise price of incentive stock options must be at least 100% of the fair market value on the grant date and exercise price of options granted to 10% (or greater) stockholders must be at least 110% of the fair market value on the grant date. ARCA’s other stock plans under which options remained outstanding as of December 31, 2012 are the Non-Employee Director Stock Option Plan. As of December 31, 2012, options to purchase 83 shares were outstanding under this stock plan.

 

In conjunction with the Merger, the Company discontinued grants under its 2004 Stock Option Plan effective January 27, 2009. As of December 31, 2012, options to purchase 76,305 shares with a weighted average exercise price of $14.04 per share were outstanding under this plan. Options and awards outstanding under this plan will continue to vest according to the original terms of each grant. No new awards will be granted under this plan. Subsequent to the Merger, the Company has granted stock-based compensation awards under the Equity Plan.

The Company granted options to purchase 5,833 and 27,450 shares of common stock in the years ended December 31, 2012 and 2011, respectively. The fair values of employee stock options granted in the years ended December 31, 2012 and 2011 were estimated at the date of grant using the Black-Scholes model with the following assumptions and had the following estimated weighted average grant date fair value per share:

 

                 
    Years Ended December 31,  
    2012     2011  

Expected term

     5.3 years       5.8 years  

Expected volatility

     108 %      110 % 

Risk-free interest rate

     0.15 %      2.20 % 

Expected dividend yield

     0 %      0 % 

Weighted-average grant date fair value per share

   $ 4.68     $ 10.95  

A summary of ARCA’s stock option activities for the years ended December 31, 2012 and 2011, and related information as of December 31, 2012, is as follows:

 

                                 
    For the years ended December 31,  
    2012     2011  
    # of
Options		     Weighted
Average
Exercise
Price		     # of
Options		     Weighted
Average
Exercise
Price		  

Options outstanding, beginning of period

     144,039     $ 19.20       158,873     $ 191.22  

Granted

     5,833       6.00       27,450       13.44  

Exercised

     —         0.00       (188 )      7.86  

Forfeited and cancelled

     (5,853 )      27.96       (42,096 )      664.86  
   

 

 

    

 

 

    

 

 

    

 

 

  

Options outstanding, end of period

     144,019     $ 18.28       144,039     $ 19.20  
   

 

 

    

 

 

    

 

 

    

 

 

  

Options exercisable, end of period

     125,666     $ 18.77       102,691     $ 20.10  
   

 

 

    

 

 

    

 

 

    

 

 

  

Options vested and expected to vest

     142,227     $ 18.30                  
   

 

 

    

 

 

                  

The total intrinsic value of options exercised for the years ended December 31, 2012 and 2011 was $0 and $1,000, respectively. As of December 31, 2012, the unrecognized compensation expense related to unvested options, excluding estimated forfeitures, was $150,000 which is expected to be recognized over a weighted average period of 0.9 years. The Company recognizes compensation costs for its share-based awards on a straight-line basis over the requisite service period for the entire award, as adjusted for expected forfeitures.

 

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2012:

 

                                                     
              Options Outstanding     Options Exercisable  

Range of Exercise Prices

     Number
Outstanding		     Weighted
Average
Remaining
Contractual
Term (in years)		     Weighted
Average
Exercise Price		     Number
Exercisable		     Weighted
Average
Exercise Price		  

$0.36

   —   $ 3.60       1,248       2.42     $ 3.13       1,248     $ 3.13  

  5.40

   —     5.40       33,844       1.20       5.40       33,844       5.40  

  6.00

   —     11.16       22,078       5.19       9.73       21,883       9.76  

13.44

   —     13.44       25,363       7.87       13.44       14,115       13.44  

16.14

   —     17.40       26,354       5.91       16.96       20,386       17.09  

17.82

   —     33.42       34,570       5.55       27.85       33,628       27.95  

87.47

   —     1,908.00       562       3.43       856.14       562       856.14  
               

 

 

                    

 

 

          
                  144,019       4.91     $ 18.28       125,666     $ 18.77  
               

 

 

                    

 

 

          

For the years ended December 31, 2012 and 2011 and for the period from Inception through December 31, 2012, the Company recognized the following non-cash, share-based compensation expense (in thousands):

 

                         
    Years Ended
December 31,		     Period from
December 17, 2001
(date of inception)
to December 31,
2012		  
    2012     2011    

Research and Development

   $         94     $         117     $         590  

Selling, General and Administrative

     212       191       1,611  

Restructuring Expense

     —         —         387  
   

 

 

    

 

 

    

 

 

  

Total

   $ 306     $ 308     $ 2,588  
   

 

 

    

 

 

    

 

 

  

Stock-based compensation expense related to non-employees was negligible in 2012 and 2011. ARCA did not recognize any tax benefit related to employee stock-based compensation cost as a result of the full valuation allowance on its net deferred tax assets.