XML 14 R9.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 5 - Stockholders' Equity
 3 Months Ended
Mar. 31, 2014
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

5.   Stockholders’ Equity


Amendments to Articles of Incorporation – Reverse Stock Split


Effective January 13, 2014, we amended our Certificate of Incorporation to change our name to Heron Therapeutics, Inc. and to effect a 1-for-20 reverse split of our outstanding common stock. The name change and Reverse Stock Split were approved by our stockholders on September 19, 2013. As a result of the Reverse Stock Split, the total authorized shares of common stock were reduced from 1,500,000,000 to 75,000,000 shares.


2011 Private Placement


In June 2011, we sold 8.0 million shares of our common stock for net proceeds of $22.8 million (net of approximately $1.2 million in issuance costs). For each share purchased, the investors received one warrant to purchase 0.5 shares of common stock at an exercise price of $3.60 per share. The warrants were immediately exercisable and expire on July 1, 2016. The warrants may be exercised for cash only, or, if a registration statement is not then effective and available for the resale of the shares of common stock issuable upon exercise of the warrants, by surrender of such warrant, or a portion of such warrant, by way of cashless exercise. There is no right to exercise the warrants to the extent that, after giving effect to such exercise the holder would beneficially own in excess of 9.99% of our outstanding shares of common stock or such other limit as may be designated by any particular purchaser. Each holder of the warrants can amend or waive the foregoing limitation by written notice to us, with such waiver taking effect only upon the expiration of a 61-day notice period.


On July 29, 2011, we filed a registration statement with the SEC to register for resale the shares and the shares of common stock issuable upon the exercise of the warrants. The registration statement was declared effective on August 4, 2011. We are obligated to maintain the effectiveness of the registration statement until the investors are able to sell shares and the shares of common stock underlying the warrants without limitation or restriction under Rule 144 of the Securities Act of 1933, as amended (“Rule 144”). There is currently only one investor who is an affiliate of ours and is therefore not able to sell without limitation under Rule 144, and that investor has agreed to waive its right to require us to maintain the effectiveness of the registration statement until it provides notice otherwise. If we fail to keep the registration statement continuously effective for a designated time (with limited exceptions) during the period we are obligated to maintain the registration statement, we may be obligated to pay to the investors liquidated damages in an amount equal to 1.0% per month of such investor’s pro rata interest in the total purchase price of the 2011 private placement, capped at a total penalty of 6.0%.


During the three months ended March 31, 2014, one warrant holder exercised 144,040 warrants under the cashless exercise provision in the warrant agreement, which resulted in the net issuance of 108,409 shares of common stock and no net cash proceeds to the Company. During the three months ended March 31, 2013, we received $0.6 million for cash exercises of these warrants. 


2012 Private Placement


In July 2012, we sold 5.1 million shares of our common stock at a purchase price of $10.50 per share, resulting in net proceeds of approximately $50.5 million (net of approximately $3.1 million in issuance costs).


On August 24, 2012, we filed a registration statement with the SEC to register these shares for resale. The registration statement was declared effective on September 6, 2012. If we fail to keep the registration statement continuously effective for a designated time (with limited exceptions), we may be obligated to pay to each investor an amount equal to 1.5% per month of the aggregate purchase price of the unregistered shares held by such investor, capped at a total penalty of 9.0%.


2013 Common Stock Offering


In November 2013, we entered into an underwriting agreement, pursuant to which we sold a total of approximately 8.6 million shares of our common stock to the underwriters at a public offering price of $8.00 per share. We received total net proceeds of approximately $57.8 million (net of approximately $3.9 million in issuance costs).


The offering was made pursuant to the Company’s effective registration statement on Form S-3 (Registration No. 333-190550), which was previously filed with the SEC and was declared effective, and a prospectus supplement filed with the SEC. The offering was not registered under any state blue sky laws and was limited to “Qualified Institutional Buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended) and certain other institutional and accredited investors, as permitted under applicable law. In the underwriting agreement, the Company agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments that the underwriters may be required to make because of such liabilities.


Stock Option Exercises


For the three months ended March 31, 2014, approximately 215,000 shares of common stock were issued pursuant to the exercise of stock options, resulting in proceeds to the Company of approximately $958,000.


Stock-Based Compensation


The following table summarizes stock-based compensation expense for the three months ended March 31, 2014 and 2013 related to stock options and Employee Stock Purchase Plan (“ESPP”) purchase rights by expense category (in thousands):


   

Three Months Ended March 31,

 
   

2014

   

2013

 
                 

Research and development

  $ 1,262     $ 249  

General and administrative

    1,707       1,586  

Stock-based compensation expense included in operating expenses

  $ 2,969     $ 1,835  
                 

Impact on basic and diluted net loss per share

  $ 0.13     $ 0.12  

As of March 31, 2014, there was approximately $45.4 million of total unrecognized compensation cost related to non-vested, stock-based payment awards granted under all of the Company’s equity compensation plans. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. The Company expects to recognize this compensation cost over a period of 2.5 years, which is the weighted-average vesting period for all stock-based compensation awards.


The Company estimated the fair value of each option grant on the grant date using the Black-Scholes option valuation model with the following weighted-average assumptions:


Options:

 

March 31,

 
   

2014

   

2013

 

Risk-free interest rate

    2.0 %     1.1 %

Dividend yield

    0.0 %     0.0 %

Volatility

    153.0 %     152.4 %

Expected life (years)

    6       6  

The Company estimates the fair value of each purchase right granted under the ESPP at the beginning of each new offering period using the Black-Scholes option valuation model. A new offering period begins every six months in May and November of each year. For the three months ended March 31, 2014 and 2013, there were no new offering periods or ESPP purchase rights granted.


The following table summarizes the stock option activity for the three months ended March 31, 2014:


   

Shares (in thousands)

   

Weighted-Average Exercise Price

   

Weighted-Average Remaining Contractual Term (Years)

 

Balance at January 1, 2014

    6,356     $ 8.22       8.14  

Granted

    1,203     $ 9.99          

Exercised

    (275

)

  $ 6.17          

Expired and forfeited

    (11

)

  $ 17.32          

Balance at March 31, 2014

    7,273     $ 8.57       8.42