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Stockholders' Equity
 9 Months Ended
Sep. 30, 2015
Stockholders' Equity

Note 10. Stockholders’ Equity

Public Offering of Common Stock

In January 2015, the Company issued 14,636,363 shares of its common stock, par value $0.001 per share, in an underwritten public offering. The price to the public in the offering was $5.50 per share. The net proceeds from this offering were approximately $75.4 million, net of the underwriting discount and other issuance costs totaling $5.1 million.

 

Common Stock and Associated Warrant Liability

In August 2009, the Company issued warrants to purchase 2.4 million shares of common stock, exercisable at an exercise price of $2.90 per share (“2009 Warrants”). In August 2014, all outstanding 2009 Warrants were exercised in full.

In November 2010, the Company issued warrants to purchase 3.7 million shares of common stock, exercisable at an exercise price of $3.20 per share (“2010 Warrants”). The 2010 Warrants became exercisable on May 15, 2011, and are exercisable for a period of five years from the issue date.

The fair value of the 2010 Warrants were recorded on the consolidated balance sheets as a liability pursuant to ASC Topic 480-10“Distinguishing Liabilities from Equity” and adjusted to fair value at each financial reporting date thereafter until the earlier of exercise, expiration or modification to remove the provisions which require the warrants to be treated as a liability, at which time, these warrants would be reclassified into stockholders’ equity. The Company classified the 2010 Warrants as a liability as these warrants contain certain provisions that, under certain circumstances, may be out of the Company’s control, and could require the Company to pay cash to settle the exercise of the warrants or may require the Company to redeem the warrants.

The fair value of the 2010 Warrants at September 30, 2015 and December 31, 2014, consisted of the following (in thousands):

 

     September 30,
2015		      December 31,
2014		  

2010 Warrants

    $ 2,424       $ 10,485   

The fair value of the Company’s 2010 Warrants was based on an option valuation model using the following assumptions at September 30, 2015 and December 31, 2014:

 

     September 30,
2015		     December 31,
2014		  

2010 Warrants:

     

Expected term (in years)

      0.11        0.86   

Estimated volatility

      61 %      55 % 

Risk-free interest rate

      0.02 %      0.25 % 

Expected dividend yield

      0 %      0 % 

The Company recorded non-cash gains of $1.1 million and $1.7 million during the three months ended September 30, 2015 and September 30, 2014, respectively, and non-cash gains of $4.7 million and $14.3 million during the nine months ended September 30, 2015 and 2014, respectively, in “Gain from revaluation of warrant liability” on its unaudited condensed consolidated statements of operations due to the changes in fair value of the warrants. Significant changes to the Company’s market price for its common stock will impact the implied and/or historical volatility used to calculate the fair value the 2010 Warrants. Any significant increases in the Company’s stock price will likely create an increase in the fair value of warrant liability. Similarly, any significant decreases in the Company’s stock price will likely create a decrease in the fair value of warrant liability. During the three months and nine months ended September 30, 2015, 175,000 and 1,544,123 shares of common stock were issued, respectively, in connection with the exercise of outstanding 2010 Warrants. As of September 30, 2015, 2010 Warrants to purchase approximately 1.8 million shares of common stock were outstanding.

Sales Agreement

On March 21, 2014, the Company entered into Amendment No. 1 to the Controlled Equity OfferingSM Sales Agreement, dated August 31, 2012 (as amended, the “Amended Cantor Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) that provides for the issuance and sale of shares of its common stock over the term of the Amended Cantor Agreement having an aggregate offering price of up to an aggregate of $70.0 million through Cantor. Under the Amended Cantor Agreement, Cantor also acts as the Company’s sales agent and receives compensation based on an aggregate of 2% of the gross proceeds on the sale price per share of its common stock. The issuance and sale of these shares by the Company pursuant to the Amended Cantor Agreement are deemed an “at-the-market” offering and are registered under the Securities Act of 1933, as amended. During the nine months ended September 30, 2015, the Company had no sales of its common stock under the Amended Cantor Agreement. At September 30, 2015, the Company had approximately $22.5 million of common stock available to be sold under the Amended Cantor Agreement.