Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Stock-Based Compensation

3. Stock-Based Compensation

Following is the stock-based compensation expense related to common stock options, common stock, restricted common stock and common stock warrants:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands)
Research and development	$	335	$	248	$	865	$	756
General and administrative		1,473		571		2,411		1,414
Total stock-based compensation expense	$	1,808	$	819	$	3,276	$	2,170

The following table summarizes the stock option activity in the Company’s equity incentive plans, including non-plan grants to Company executives, from December 31, 2012 through September 30, 2013:

	Shares			Weighted Average Exercise Price
Outstanding, December 31, 2012		3,539,961		$	5.66
Granted		425,426			3.89
Exercised		(156,349	)		1.69
Options forfeited/cancelled		(302,041	)		17.16
Outstanding, September 30, 2013		3,507,005		$	4.59

As of September 30, 2013, there was $5,086,000 of unrecognized compensation related to 1,515,137 unvested options, which is expected to be recognized over a weighted–average period of approximately 4.2 years. The weighted-average grant date fair value for options granted during the three and nine months ended September 30, 2013 was $3.55 and $3.17, respectively. The weighted-average grant date fair value for options granted during the three and nine months ended September 30, 2012 was $1.89 and $1.72, respectively.

The fair value of all other options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptions were used:

	Nine Months Ended September 30,			Cumulative Period from Inception (July 10, 2000) to September 30, 2013
	2013
Risk-free interest rate		1.17	%		1.75	%
Expected life of the options		5.3 years			5.2 years
Expected volatility of the underlying stock		115	%		119	%
Expected dividend rate		0	%		0	%

On September 26, 2013, the Company modified certain vested stock options held by a former member of the Company’s board of directors. The individual left the board on May 23, 2013. The modification extended the contractual period of exercise of 103,158 stock options until the end of their original terms instead of such options expiring 3 months after service on the board ended. As a result, the Company recorded a non-cash charge of $930,000 related to the modification in the quarter ended September 30, 2013.