8. EQUITY COMPENSATION PLANS

12 Months Ended

Apr. 30, 2012

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

8. EQUITY COMPENSATION PLANS

Stock Incentive Plans

We currently maintain seven stock incentive plans referred to as the 2011 Plan, the 2010 Plan, the 2009 Plan, the 2005 Plan, the 2003 Plan, the 2002 Plan, and the 1996 Plan (collectively referred to as the “Stock Plans”). The 2011, 2010, 2009, 2005, 2003 and 1996 Plans were approved by our stockholders while the 2002 Plan was not submitted for stockholder approval. The Stock Plans provide for the granting of stock options, restricted stock awards and other forms of share-based awards to purchase shares of our common stock at exercise prices not less than the fair market value of our common stock at the date of grant.

As of April 30, 2012, we had an aggregate of 12,305,978 shares of common stock reserved for issuance under the Stock Plans. Of those shares, 7,531,651 shares were subject to outstanding options and 4,774,327 shares were available for future grants of share-based awards.

Stock Options – Stock options granted under our Stock Plans are granted at an exercise price not less than the fair market value of our common stock on the date of grant. The options generally vest over a two to four year period and expire ten years from the date of grant, if unexercised. However, certain option awards provide for accelerated vesting if there is a change in control (as defined in the Stock Plans).

The fair value of each option grant is estimated using the Black-Scholes option valuation model and is amortized as compensation expense on a straight-line basis over the requisite service period of the award, which is generally the vesting period. The use of a valuation model requires us to make certain estimates and assumptions with respect to selected model inputs. The expected volatility is based on the daily historical volatility of our common stock covering the estimated expected term. The expected term of options granted reflects actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. The risk-free interest rate is based on U.S. Treasury notes with terms within the contractual life of the option at the time of grant. The expected dividend yield assumption is based on our expectation of future dividend payouts. We have never declared or paid any cash dividends on our common stock and currently do not anticipate paying such cash dividends. In addition, guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The fair value of stock options on the date of grant and the weighted-average assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model for fiscal years ended April 30, 2012, 2011 and 2010, were as follows:

	Year Ended April 30,
	2012			2011			2010
Risk-free interest rate		1.44	%		2.09	%		2.69	%
Expected life (in years)		5.92			6.00			6.00
Expected volatility		74.08	%		73.42	%		73.30	%
Expected dividend yield		—			—			—

The following summarizes our stock option transaction activity for fiscal year ended April 30, 2012:

Stock Options	Shares			Weighted Average Exercisable Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (1)
Outstanding, May 1, 2011		4,869,599		$	4.16
Granted		3,615,063		$	1.51
Exercised		—		$	—
Canceled or expired		(953,011	)	$	4.04
Outstanding, April 30, 2012		7,531,651		$	2.90		7.72	$	—
Exercisable and expected to vest		7,402,248		$	2.93		7.69	$	—
Exercisable, April 30, 2012		4,152,663		$	4.08		6.33	$	—

⁽¹⁾ Aggregate intrinsic value represents the difference between the exercise price of an option and the closing market price of our common stock on April 30, 2012, which was $0.47 per share.

The weighted-average grant date fair value of options granted to employees during the fiscal years ended April 30, 2012, 2011 and 2010 was $0.99, $1.31 and $1.99 per share, respectively.

The aggregate intrinsic value of stock options exercised during the fiscal years ended April 30, 2011 and 2010 was $5,000 and $82,000, respectively. Cash proceeds from stock options exercised during the fiscal years ended April 30, 2011 and 2010 totaled $44,000 and $106,000, respectively, excluding issuance costs of $0 and $1,000, respectively. No stock options were exercised during fiscal year ended April 30, 2012.

We issue shares of common stock that are reserved for issuance under the Stock Plans upon the exercise of stock options, and we do not expect to repurchase shares of common stock from any source to satisfy our obligations under our compensation plans.

As of April 30, 2012, the total estimated unrecognized compensation cost related to non-vested stock options was $2,733,000. This cost is expected to be recognized over a weighted average vesting period of 1.96 years based on current assumptions.

Restricted Stock Awards – Restricted stock awards are grants that entitle the holder shares of common stock subject to certain terms. The fair value of restricted stock awards is the quoted market price of our stock on the grant date, and is charged to expense over the period of vesting. Restricted stock awards associated with non-performance conditions vest over the requisite service period and restricted stock awards associated with performance conditions are subject to vesting upon completion of the underlying performance condition. Performance based restricted stock awards are subject to forfeiture if the underlying performance condition is not achieved and all restricted stock awards are subject to forfeiture to the extent that the recipient’s service is terminated prior to the awards becoming vested.

The following summarizes our restricted stock awards transaction activity for fiscal year ended April 30, 2012:

Restricted Stock	Shares			Weighted Average Grant Date Fair Value
Unvested, May 1, 2011		68,250		$	2.98
Granted		—		$	—
Vested		—		$	—
Forfeited		(68,250	)	$	2.98
Unvested, April 30, 2012		—		$	—

The weighted-average grant date fair value of restricted stock awards granted during fiscal years ended April 30, 2011 and 2010, was $2.37 and $2.97, respectively. No restricted stock awards were granted during fiscal year 2012. The total fair value of restricted stock awards vested during fiscal year ended April 30, 2011 was $404,000. No restricted stock awards vested during fiscal years 2012 and 2010. As of April 30, 2012, there was no unrecognized compensation cost related to unvested restricted stock awards.

Employee Stock Purchase Plan

On October 21, 2010, our stockholders approved our 2010 Employee Stock Purchase Plan. The 2010 Employee Stock Purchase Plan (the “2010 ESPP”) allows eligible employees on a voluntary basis to purchase shares of our common stock directly from the Company. Under the 2010 ESPP, we will sell shares to participants at a price equal to the lesser of 85% of the fair market value of stock at the (i) beginning of a six-month offering period or (ii) end of the six-month offering period. The 2010 ESPP provides for two six-month offering periods each fiscal year; the first offering period will begin on the first trading day on or after each November 1; the second offering period will begin on the first trading day on or after each May 1.

A total of 5,000,000 shares are reserved for issuance under the 2010 ESPP, of which 4,437,115 shares remained available to purchase at April 30, 2012 and are subject to adjustment as provided in the 2010 ESPP for stock splits, stock dividends, recapitalizations and other similar events. During the fiscal years ended April 30, 2012 and 2011, 458,041 and 104,844 shares of common stock were purchased, respectively, under the 2010 ESPP at a weighted average purchase price per share of $0.52 and $1.28, respectively.

The fair value of the shares purchased under the 2010 ESPP were determined using a Black-Scholes option pricing model (see explanation of valuation model inputs above under “Stock Options”), and is recognized as expense on a straight-line basis over the requisite service period (or six-month offering period). The weighted average grant date fair value of purchase rights under the 2010 ESPP during fiscal years ended April 30, 2012 and 2011 was $0.46 and $0.52, respectively, based on the following Black-Scholes option valuation model inputs:

	Year Ended April 30,
	2012			2011
Risk-free interest rate		0.06	%		0.15	%
Expected life (in years)		0.50			0.50
Expected volatility		67.96	%		82.72	%
Expected dividend yield		—			—

Share-based Compensation Expense

Total share-based compensation expense related to share-based awards issued under our equity compensation plans for the fiscal years ended April 30, 2012, 2011 and 2010 was comprised of the following:

	2012		2011		2010
Cost of contract manufacturing	$	12,000	$	8,000	$	—
Research and development		1,018,000		1,134,000		784,000
Selling, general and administrative		1,739,000		1,695,000		637,000
Total share-based compensation expense	$	2,769,000	$	2,837,000	$	1,421,000
Share-based compensation from:
Stock options	$	2,673,000	$	2,598,000	$	1,202,000
Restricted stock awards		—		185,000		219,000
Employee stock purchase plan		96,000		54,000		—
	$	2,769,000	$	2,837,000	$	1,421,000

The cost of non-employee services received in exchange for share-based awards are measured based on either the fair value of the consideration received or the fair value of the share-based award issued, whichever is more reliably measurable. In addition, the authoritative guidance requires share-based compensation related to unvested options and awards issued to non-employees to be recalculated at the end of each reporting period based upon the fair market value on that date until the share-based award has vested, and any adjustment to share-based compensation resulting from the remeasurement is recognized in the current period. Share-based compensation expense recorded during fiscal years ended April 30, 2012, 2011 and 2010 associated with stock options and awards granted to non-employees amounted to $51,000, $114,000 and $113,000, respectively.

Due to our net loss position, no tax benefits have been recognized in the consolidated statements of cash flows.