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Stock-Based Compensation
 6 Months Ended
Jun. 30, 2013
Stock-Based Compensation
Stock-Based Compensation
Stock Options
Our 2008 Equity Incentive Plan, or 2008 Plan, provides for the grant of incentive and nonstatutory stock options, restricted stock, stock appreciation rights, performance units and performance shares to employees, directors and consultants and subsidiary corporations’ employees and consultants. The 2008 Plan also allows any shares returned under our Amended and Restated 1998 Stock Option Plan, or 1998 Plan, as a result of cancellation of options or repurchase of shares issued pursuant to the 1998 Plan, to be issued under the 2008 Plan subject to a maximum limit of 3,084,848 shares. As of June 30, 2013 a total of 365,696 shares have been reserved under the 2008 Plan as a result of the cancellation of options or repurchase of shares under the 1998 Plan. In addition, the 2008 Plan provides for annual increases in the number of shares available for issuance thereunder on the first day of each fiscal year, beginning with the 2010 fiscal year, equal to the lowest of:
•
five percent of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year;
•
1,785,714 shares; or
•
such other amount as our board of directors may determine.
On January 1, 2013, in accordance with the 2008 Plan annual increase provisions, the authorized shares in the 2008 Plan increased by 1,294,874 shares. As of June 30, 2013, a total of 5,835,258 shares were reserved for issuance under the 2008 Plan. Options are granted with exercise prices equal to the closing fair market value of the common stock on the date of the grant. The terms of options may not exceed 10 years. Generally, options vest over a four-year period, but may be granted with different vesting terms.
Compensation cost for stock options granted to employees is based on the grant-date fair value and is recognized over the vesting period of the applicable option on a straight-line basis. As stock-based compensation expense is based on options ultimately expected to vest, the expense has been reduced for estimated forfeitures. The fair value of each employee option grant was estimated on the date of grant using the Black-Scholes option- pricing model with the following assumptions during the periods ended:
 
 
Three Months Ended
June 30,
 
Six Months Ended
June  30,
 
2013
 
2012
 
2013
 
2012
Estimated weighted-average fair value
$
3.57

 
$
7.09

 
$
3.57

 
$
3.28

Weighted-average assumptions
 
 
 
 
 
 
 
Expected volatility
82
%
 
86
%
 
82
%
 
89
%
Expected term, in years
5.5

 
5.5

 
5.5

 
5.7

Risk-free interest rate
1.02
%
 
0.78
%
 
1.02
%
 
1.05
%
Expected dividend yield
—
%
 
—
%
 
—
%
 
—
%

Stock-Based Compensation Summary
Stock-based compensation expense includes amortization of stock options granted to employees and non-employees’ and has been reported in our consolidated statements of operations as follows:
 
 
Three Months Ended  
 June 30,
 
Six Months Ended 
 June 30,
 
2013
 
2012
 
2013
 
2012
 
(In thousands)
 
(In thousands)
Research and development
$
566

 
$
285

 
$
1,147

 
$
853

Selling, general and administrative
494

 
284

 
1,006

 
847

Total
$
1,060

 
$
569

 
$
2,153

 
$
1,700


Stock option activity and related information is as follows:
 
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price per
Share
 
Remaining
Contractual  Life
(in years)
 
Aggregate
Intrinsic
Value
(In thousands)
Balance at December 31, 2012
5,390,582

 
$
5.18

 
 
 
 
Granted
25,000

 
5.30

 
 
 
 
Exercised
(32,284
)
 
1.31

 
 
 
 
Forfeited
(74,437
)
 
7.45

 
 
 
 
Balance at June 30, 2013
5,308,861

 
$
5.18

 
6.76
 
$
7,650

Vested and expected to vest at June 30, 2013
5,142,695

 
$
5.09

 
6.70
 
$
7,604

Exercisable at June 30, 2013
3,540,828

 
$
3.87

 
5.75
 
$
7,191


At June 30, 2013, there were 1,768,033 unvested options outstanding that will vest over a weighted-average period of 2.4 years. Excluding non-employee stock options, the total estimated compensation expense to be recognized in connection with these shares is $8.0 million.