Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 3 – STOCK-BASED COMPENSATION

The following table shows total stock-based compensation expense recognized in the consolidated statements of operations (in thousands):

	Year Ended December 31,
	2011		2010		2009
Research and development	$	3,769	$	3,612	$	4,115
General and administrative		4,312		4,206		4,352
Total stock-based compensation expense	$	8,081	$	7,818	$	8,467

As of December 31, 2011, total compensation cost related to unvested stock options to be recognized in future periods was $9.4 million, which is expected to be expensed over a weighted-average period of 2.48 years. As of December 31, 2011, total compensation cost related to unvested RSUs to be recognized in future periods was $1.4 million, which is expected to be expensed over a weighted-average period of 2.93 years. There was no capitalized stock-based employee compensation cost as of December 31, 2011.

Valuation Assumptions

The employee stock-based compensation expense was determined using the Black Scholes option valuation model. Option valuation models require the input of subjective assumptions and these assumptions can vary over time.

The Company primarily bases its determination of expected volatility through its assessment of the historical volatility of its common stock. The Company relied on its historical exercise and post-vested termination activity for estimating its expected term for use in determining the fair value of these options.

The weighted–average assumptions used for estimating the fair value of the employee stock options are as follows:

	Year Ended December 31,
	2011			2010			2009
Risk-free interest rate		0.93-2.11	%		1.5-2.6	%		2.0-2.2	%
Expected life of option		5.39-5.41 yrs			5.23-5.41 yrs			5.31-5.38 yrs
Expected dividend yield of stock		0	%		0	%		0	%
Expected volatility		0.83-0.86			0.83-0.84			0.83

The weighted–average assumptions used for estimating the fair value of the ESPP purchase rights are as follows:

	Year Ended December 31,
	2011			2010			2009
Risk-free interest rate		0.05-0.61	%		0.2-1.0	%		0.2-0.9	%
Expected life of option		0.5-2.0 yrs			0.5-2.0 yrs			0.5-2.0 yrs
Expected dividend yield of stock		0	%		0	%		0	%
Expected volatility		0.58-0.85			0.62-1.14			0.63-1.97