Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The Company incurs stock-based compensation expense related to restricted stock units and stock options. The fair value of restricted stock is determined by the closing market price of the Company's common stock on the date of grant. The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility and expected option life. The Company amortizes the fair value of the awards expected to vest on a straight-line basis over the requisite service period of the awards. Expected volatility is based on historical volatility. The expected life of options granted is based on historical expected life. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant. The forfeiture rate is based on historical data, and the Company records stock-based compensation expense only for those awards that are expected to vest. The dividend yield is based on the fact that no dividends have been paid historically and none are currently expected to be paid in the foreseeable future.

The weighted average assumptions used in the Black-Scholes model for employees and directors are presented below:



	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Risk-free interest rate	1.00%	1.68%	0.99%	1.52%
Expected volatility	75%	110%	74%	111%
Expected life in years	5.0	5.1	5.0	5.1
Dividend yield	—	—	—	—
Forfeiture rate	7%	8%	8%	8%

Total employee and director compensation cost for the Company's stock plan recognized in the condensed consolidated statement of operations for the three and six months ended June 30, 2015 was $1.3 million and $3.5 million, respectively, of which $649,000 and $2.0 million were included in research and development expenses and $612,000 and $1.5 million were included in general and administrative expenses, respectively.

Total employee and director compensation cost for the Company's stock plan recognized in the condensed consolidated statement of operations for the three and six months ended June 30, 2014 was $1.2 million and $3.3 million, respectively, of which $614,000 and $2.0 million were included in research and development expenses and $551,000 and $1.3 million were included in general and administrative expenses, respectively.

At June 30, 2015, there was $7.3 million of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.2 years.

The weighted average grant date fair value per share was $5.02 and $4.62 for employee and director stock options granted during the three and six months ended June 30, 2015, respectively, and $7.33 and $9.33 for employee and director stock options granted during the three and six months ended June 30, 2014, respectively.

At June 30, 2015, there was $1.6 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.5 years.

The weighted average grant date fair value was $8.01 and $7.76 per share for employee restricted stock units granted during the three and six months ended June 30, 2015, respectively. There were no restricted stock units granted during the three and six months ended June 30, 2014.

The fair value of options granted to non-employees at the measurement dates were estimated using the Black-Scholes pricing model. Total stock-based compensation for options granted to non-employees for the three and six months ended June 30, 2015 was $101,000 and $270,000, respectively. Total stock-based compensation for options granted to non-employees for the three and six months ended June 30, 2014 was $69,000 and $459,000, respectively.