Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

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 nine months ended September 30, 2013 and 2012 are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Risk free interest rate	1.5% to 1.7%		0.7% to 0.9%		0.8% to 1.7%		0.2% to 1.2%
Expected term	5.1 to 6.0 years		5.0 to 6.1 years		5.0 to 6.1 years		5.0 to 6.1 years
Expected volatility	82.8% to 83.9%		80.1% to 81.7%		82.8% to 87.9%		80.1% to 82.8%
Expected dividend yield	—	%	—	%	—	%	—	%

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 Company's historical volatility, supplemented with historical volatility of comparable companies whose share prices are publicly available for a sufficient period of time.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of sales	$	119	$	53	$	227	$	130
Research and development	316		256		782		687
Selling, general and administrative	1,780		1,433		4,570		3,721
Restructuring	—		—		201		—
Total	$	2,215	$	1,742	$	5,780	$	4,538

As of September 30, 2013, there was approximately $12,898,000 of total unrecognized compensation costs related to outstanding options, which is expected to be recognized over a weighted average period of 2.7 years.