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Common Stock
 12 Months Ended
Dec. 31, 2011
Common Stock [Abstract]  
Common Stock

Note 14. Common Stock

We have neither declared nor paid dividends on any share of common stock and do not expect to do so in the foreseeable future.

We effected a 1-for-10 reverse stock split on July 6, 2011. As a result of the reverse stock split, the outstanding shares of common stock issued and outstanding were reduced from approximately 139 million to 13.9 million. Concurrent with the reverse stock split, we reduced the authorized number of common shares from 250 million to 75 million. The reverse stock split proportionately reduced all issued and outstanding shares of our common stock, as well as common stock underlying stock options, warrants and other common stock based equity grants outstanding immediately prior to the effectiveness of the reverse stock split. The exercise price on outstanding equity based-grants was proportionately increased, while the number of shares available under our equity-based plans was proportionately reduced. Share and per share data (except par value) for the periods presented reflect the effects of this reverse stock split. References to numbers of shares of common stock and per share data in the accompanying financial statements and notes thereto have been adjusted to reflect the reverse stock split on a retroactive basis.

Sale of common stock

Major transactions involving our common stock for the last three years include the following:

 

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In December 2011, we raised gross proceeds of $10 million through a public offering of 8,000,000 Units and 8,000,000 Series B warrants. The combination of Units and Series B warrants were sold at a public offering price of $1.25 per Unit. Each Series B warrant gives the holder the right to purchase one Unit at an exercise price of $1.25 per Unit and is exercisable until May 2, 2012, the 90th trading day after the date of issuance. Each Unit consists of one share of our common stock and one Series A warrant. Each Series A warrant gives the holder the right to purchase one share of our common stock at an initial exercise price of $1.40 per share. The Series A warrants are immediately exercisable upon issuance and will expire on the fifth anniversary of the closing date of the initial financing transaction in December 2011. The shares were offered under our effective shelf registration statement previously filed with the SEC.

 

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In January 2011, we sold 1,000,000 shares of our common stock to selected institutional investors at a price of $10.00 per share. We received net proceeds, after deducting offering expenses and fees, of approximately $9,400,000. The investors were also granted an option to purchase an additional 600,000 shares at $10.00 per share. The option was not exercised and expired on February 18, 2011. The shares were offered under a shelf registration previously filed with, and declared effective by, the SEC.

 

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In 2011, we sold a total of 525,116 shares of our common stock under a sales agreement entered into in June 2009 (“2009 sales agreement”) at an average price per share of $2.47 for gross proceeds of approximately $1,297,000. Under the terms of the 2009 sales agreement, we may sell up to $30,000,000 of our common stock, from time to time through a sales agent. The sales agent is paid compensation equal to 3.0% of gross proceeds pursuant to the terms of the agreement. The shares were offered under a shelf registration previously filed with, and declared effective by, the SEC.

 

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In 2010, we sold a total of 147,520 shares of our common stock under the 2009 sales agreement at an average price per share of $11.60 for gross proceeds of approximately $1,705,000. The sales agent is paid compensation equal to 3.0% of the gross proceeds pursuant to the terms of the agreement. The shares were offered under a shelf registration previously filed with, and declared effective by, the SEC.

 

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On June 29, 2010, we sold 700,000 shares of our common stock to an institutional investor, at a price of $8.65 per share. We received net proceeds, after deducting offering expenses and fees, of approximately $5,700,000. No warrants were issued in this transaction. The shares were offered under a shelf registration previously filed with, and declared effective by, the SEC. As part of the purchase agreement, the institutional investor agreed to purchase an additional 500,000 shares of common stock approximately 12 weeks after the initial sale, at our option and at a purchase price to be calculated using the then-current trading price. We decided not to sell these additional shares and on September 20, 2010, we terminated the purchase agreement.

 

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In November 2009, we sold 1,000,000 units to institutional investors at a price of $12.50 per unit, for gross proceeds of $12,500,000. The units, each of which consisted of one share of common stock and a warrant to purchase 0.4 shares of common stock at an exercise price of $15.00 per share. We received total proceeds net of offering expenses and placement agency fees of approximately $11,985,000. The shares were offered under a shelf registration previously filed with, and declared effective by, the SEC.

 

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In 2009, we sold a total of 183,000 shares of our common stock under the 2009 sales agreement at an average price per share of $18.00 for gross proceeds of approximately $3,291,000. The shares were offered under a shelf registration previously filed with, and declared effective by, the SEC.

 

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On April 1, 2009, we acquired the operations of SCS. As consideration, we issued to SCS 265,000 shares of common stock and waived certain commitments of SCS to repay approximately $709,000 in principal and accrued interest owed to us. The closing price of our common stock was $16.70 per share on April 1, 2009.

Stock Issued For Technology Licenses

Under license agreements with NeuroSpheres, Ltd., we obtained an exclusive patent license covering all uses of certain neural stem cell technology. We made up-front payments to NeuroSpheres of 6,500 shares of our common stock and $50,000, and will make additional cash payments as stated milestones are achieved. Effective in 2004, we began making annual $50,000 payments, creditable against certain royalties. Effective 2008, as part of an indemnification agreement with NeuroSpheres, we offset the annual $50,000 obligation against litigation costs incurred under that agreement. The estimated balance for future offsets is included under “Other assets, non-current” on our accompanying Consolidated Balance Sheets. We have concluded that the estimated balance of $650,000 as of December 31, 2011 is a fair estimate and realizable against future milestone and royalty payments to NeuroSpheres, and that litigation costs incurred after December 31, 2010 will be expensed as incurred. Management will reevaluate this estimate on a quarterly basis based on actual costs and other relevant factors.

Pursuant to the terms of a license agreement with the California Institute of Technology (Cal Tech) and our acquisition of its wholly owned subsidiary, StemCells California, we issued 14,513 shares of common stock to Cal Tech. We issued an additional 1,280 shares of common stock to Cal Tech with a market value of approximately $40,000 in May 2000, upon execution of an amendment adding four families of patent applications to the license agreement. In August 2002, we acquired an additional license from Cal Tech for a different technology, pursuant to which we issued 2,754 shares of our common stock with a market value of approximately $35,000. Under terms of the license agreement with the Cal Tech, annual fees of $5,000 were due on each of two patents to which we hold a license from Cal Tech, payable in cash or common stock at our choice. We elected to pay the fees in stock and issued 590 shares in 2009, 692 shares in 2008, 387 shares in 2007 and 385 shares in 2006. In September 2010, we terminated all our licensing agreements with Cal Tech.

Common Stock Reserved

We reserved the following shares of common stock for the exercise of options, warrants and other contingent issuances of common stock, as of December 31, 2011:

 

         

Shares reserved for share based compensation

     2,273,006  

Shares reserved for warrants related to financing transactions

     25,434,483  

Shares reserved for possible future issuances under an effective shelf registration

     3,263,346  
   

 

 

  

Total

     30,970,835