Note 7 - Option to Acquire Company

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

7. Option to Acquire Company

In March 2009, the Company entered into an option agreement with a major pharmaceutical entity that provided an exclusive option to acquire the Company under a pre-negotiated merger agreement. The Company received a $10.0 million non-refundable payment as consideration for the agreement. The fair value of the option to acquire the Company was estimated using the Black-Scholes option-pricing model with the following assumptions:

Expected volatility		76%
Expected option expiration date	June 30, 2013
Expected dividends		0%
Expected term (years)		4.34
Risk-free rate		1.80%

Expected volatility was based on historical volatility of companies within the biotechnology industry. The exercise price of the option to acquire all outstanding shares of Company stock, prior to the payment of contingent program milestones, was $240.0 million. The fair value of the option to acquire all of the outstanding shares of the Company was estimated to be $7.1 million, which was recorded as additional paid-in capital during 2009. The $2.9 million difference between the $10.0 million non-refundable payment and the fair value of the option was recorded as deferred revenue during 2009, representing the value of certain residual rights in the event the acquisition option is not exercised (e.g., a right, under certain circumstances, to license the Company's underlying technology). The acquisition option expired unexercised in 2013. On August 3, 2014, the residual rights under this option agreement lapsed and the $2.9 million in deferred revenue was recognized as revenue on that date.