Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation

Note 11 — Stock-Based Compensation

The Company has granted equity awards under several plans. Under the 2005 Stock Incentive Plan (the “2005 Plan”), equity awards may be granted to officers, directors, employees, consultants and advisors to the Company and any present or future subsidiary. The 2005 Plan, approved in May 2005 and amended in June 2007 and June 2011 by the Company’s stockholders, currently authorizes the grant of equity awards for up to 14,312,192 shares of common stock, which included, at the time of approval of the 2005 Plan, a maximum 5,746,468 shares of common stock subject to stock options outstanding under the Company’s 1995 Stock Option Plan (the “1995 Plan”) that may revert to and become issuable under the 2005 Plan if such options should expire or otherwise terminate unexercised. The term of the Company’s 1995 Plan has expired. Outstanding stock options remain in existence in accordance with their terms and no new awards will be made under the 1995 Plan.

Under the 2005 Plan and the 1995 Plan, incentive stock options, having a maximum term of 10 years, can be or were granted at no less than 100% of the fair value of the Company’s common stock at the time of grant and are generally exercisable over periods ranging from six months to four years. There is no minimum exercise price for non-statutory stock options.

The Company recorded stock-based compensation expense in the statements of operations as follows (in thousands):

	Years ended December 31,
	2011		2010		2009
Research and development	$	610	$	335	$	539
General and administrative		1,437		1,004		994
Total stock-based compensation expenses	$	2,047	$	1,339	$	1,533

Stock Options Awards

The following is a summary of option activity under the 2005 Plan and the 1995 Plan for the year ended December 31, 2011:

	2005 Stock Incentive Plan					1995 Stock Option Plan
	Stock Options			Weighted- Average Exercise Price		Stock Options			Weighted- Average Exercise Price
Outstanding at January 1, 2011		5,214,794		$	2.34		579,850		$	4.97
Granted		3,625,400		$	2.08		—		$	—
Exercised		(198,679	)	$	0.90		—		$	—
Canceled		(1,228,769	)	$	2.54		(105,200	)	$	7.81
Outstanding at December 31, 2011		7,412,746		$	2.22		474,650		$	4.38
Vested and expected to vest at December 31, 2011		6,653,550		$	2.25		474,650		$	4.38
Shares exercisable at December 31, 2011		3,705,448		$	2.39		474,650		$	4.38
Shares available for grant at December 31, 2011		3,311,224

The fair value of the stock options granted for the years ended December 31, 2011, 2010 and 2009, was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	2011		2010		2009
Weighted average fair value of options granted		$1.14		$1.47		$1.29
Risk-free interest rate		0.48% – 1.91%		0.93% – 2.89%		1.56% – 3.19%
Dividend yield		0%		0%		0%
Volatility		73.3% – 81.0%		97.0% – 108.0%		85.7% – 119.5%
Expected term (in years)		3.26 – 4.47		3.06 – 6.26		3.89 – 7.05
Expected forfeiture rate		0 – 23.15%		21.07%		21.07%

The aggregate intrinsic value and weighted-average remaining contractual term of stock options exercisable as of December 31, 2011 was approximately $0.2 million and 3.8 years, respectively. The aggregate intrinsic value and weighted-average remaining contractual term of options vested and expected to vest as of December 31, 2011 was $0.3 million and 7.0 years, respectively. The aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2011. This amount is subject to change based on changes to the fair market value of the Company’s common stock. The aggregate intrinsic value of options exercised for 2011, 2010 and 2009 was $0.3 million, $0.3 million and $0.9 million, respectively.

Restricted Stock Awards

Under the 2005 Plan, the Company granted restricted stock awards subject to certain performance-based or time-based vesting conditions which, if not met, would result in forfeiture of the shares and reversal of any previously recognized related stock-based compensation expense.

The following is a summary of restricted stock awards activity for the year ended December 31, 2011:

	Number of Shares			Per Share Weighted- Average Grant-Date Fair Value
Outstanding at January 1, 2011		56,666		$	2.47
Restricted stock granted		50,000		$	1.39
Restricted stock vested		(53,333	)	$	2.30
Restricted stock forfeited		—		$	—
Outstanding at December 31, 2011		53,333		$	1.63

As of December 31, 2011, there was approximately $3.0 million of total unrecognized compensation expense (net of estimated forfeitures) related to unvested options and restricted stock awards. This unrecognized compensation expense is expected to be recognized over a weighted average period of 1.6 years.