Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

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,
	2012		2011		2010
Research and development	$	2,892	$	3,769	$	3,612
General and administrative		2,446		4,312		4,206
Total stock-based compensation expense	$	5,338	$	8,081	$	7,818

As of December 31, 2012, total stock-based compensation expense related to unvested stock options to be recognized in future periods was $9.8 million, which is expected to be expensed over a weighted-average period of 2.79 years. As of December 31, 2012, total compensation expense related to unvested RSUs to be recognized in future periods was $3.5 million, which is expected to be expensed over a weighted-average period of 2.40 years. There was no capitalized stock-based employee compensation expense as of December 31, 2012.

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 estimated fair value per share of options granted during 2012, 2011 and 2010 was $3.76, $3.20 and $3.85, respectively, based upon the assumption in the Black-Scholes valuation model. The weighted–average assumptions used for estimating the fair value of the employee stock options are as follows:

	Year Ended December 31,
	2012			2011			2010
Risk-free interest rate		0.74-1.34	%		0.93-2.11	%		1.5-2.6	%
Expected life of option (in years)		5.40-5.58			5.39-5.41			5.23-5.41
Expected dividend yield of stock		0	%		0	%		0	%
Expected volatility		0.87-0.88			0.83-0.86			0.83-0.84

Employees purchased approximately 175,000, 153,000 and 134,000 shares of common stock through the 2010 Purchase Plan at an average exercise price of $2.61, $3.02 and $3.34 per share during the fiscal years 2012, 2011 and 2010, respectively.

The weighted-average estimated fair value of shares purchased under the Company’s ESPP during 2012, 2011 and 2010 were $2.51, $1.62 and $2.76, respectively, based upon the assumptions in the Black-Scholes valuation model. The weighted–average assumptions used for estimating the fair value of the ESPP purchase rights are as follows:

	Year Ended December 31,
	2012			2011			2010
Risk-free interest rate		0.05-0.30	%		0.05-0.61	%		0.2-1.0	%
Expected life of option (in years)		0.5-2.0			0.5-2.0			0.5-2.0
Expected dividend yield of stock		0	%		0	%		0	%
Expected volatility		0.93-1.37			0.58-0.85			0.62-1.14