Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

5. Stock-Based Compensation

The Company uses the Black-Scholes option-pricing model for determining the estimated fair value of stock-based compensation for stock-based awards to employees and the board of directors. The assumptions used in the Black-Scholes option-pricing model for the three and six months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2012	2011	2012	2011
Risk free interest rate	0.7% to 1.0%	1.8% to 2.6%	0.2% to 1.2%	1.8% to 2.6%
Expected term	5.0 to 6.1 years	5.1 to 6.1 years	5.0 to 6.1 years	5.0 to 6.1 years
Expected volatility	81.5% to 82.8%	72.3% to 75.2%	80.6% to 82.8%	72.3% to 89.7%
Expected dividend yield	0.0%	0.0%	0.0%	0.0%

The risk-free interest rate assumption was based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The weighted average expected term of options was calculated using the simplified method as prescribed by accounting guidance for stock-based compensation. This decision was based on the lack of relevant historical data due to the Company’s limited historical experience. In addition, due to the Company’s limited historical data, the estimated volatility was calculated based upon the historical volatility of comparable companies whose share prices have been publicly available for a sufficient period of time.

The Company recognized stock-based compensation expense as follows (in thousands):

	Three Months Ended June  30,				Six Months Ended June  30,
	2012		2011		2012		2011
Cost of sales	$	47	$	36	$	76	$	62
Research and development		236		186		431		331
Selling, general and administrative		1,255		1,010		2,287		1,790
Total	$	1,538	$	1,232	$	2,794	$	2,183

As of June 30, 2012, there was approximately $14,557,000 of total unrecognized compensation costs related to outstanding options, which is expected to be recognized over a weighted average period of 3.3 years.