Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

(11)  Stock-Based Compensation

The Company has the following stock-based compensation plans: the 2004 Employee Stock Purchase Plan (the “2004 ESPP Plan”), the 2008 Stock Option and Incentive Plan (the “2008 Plan”), Celldex Research’s 2005 Equity Incentive Plan (the “Celldex Research 2005 Plan”) and the CuraGen 2007 Plan. The Company assumed the obligations under the Celldex Research 2005 Plan and CuraGen 2007 Plan in connection with the AVANT Merger and CuraGen Merger, respectively, and there are no shares available for future grant under either plan.

Employee Stock Purchase Plan

At June 30, 2011, a total of 62,500 shares of common stock are reserved for issuance under the 2004 ESPP Plan. Under the 2004 ESPP Plan, each participating employee may purchase up to 250 shares of common stock per year, through payroll deductions, at a purchase price equal to 85% of the lower of the fair market value of the common stock at either the beginning of the offering period or the applicable exercise date.  During the six months ended June 30, 2011 and 2010, the Company issued 4,832 and 4,753 shares under the 2004 ESPP Plan, respectively. At June 30, 2011, 46,177 shares were available for issuance under the 2004 ESPP Plan.

Employee Stock Option and Incentive Plan

The 2008 Plan permits the granting of incentive stock options (intended to qualify as such under Section 422A of the Internal Revenue Code of 1986, as amended), non-qualified stock options, stock appreciation rights, performance share units, restricted stock and other awards of restricted stock in lieu of cash bonuses to employees, consultants and outside directors.

At June 30, 2011, the 2008 Plan allowed for a maximum of 3,900,000 shares of common stock to be issued prior to October 19, 2017. The Company’s board of directors determines the term of each option, option price, and number of shares for which each option is granted and the rate at which each option vests. Options generally vest over a period not to exceed four years. The term of each option cannot exceed ten years (five years for options granted to holders of more than 10% of the voting stock of the Company) and the exercise price of stock options cannot be less than the fair market value of the common stock at the date of grant (110% of fair market value for incentive stock options granted to holders of more than 10% of the voting stock of the Company).  Vesting of all employee and non-employee director stock option awards is accelerated upon a change in control as defined in the 2008 Plan.

A summary of stock option activity for the six months ended June 30, 2011 is as follows:

	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (In Years)
Options Outstanding at December 31, 2010	4,019,982		$	6.93	6.6
Granted	20,250		$	4.04
Exercised	—		—
Canceled	(323,950	)	$	8.05
Options Outstanding at June 30, 2011	3,716,282		$	6.82	6.7
Options Vested and Expected to Vest at June 30, 2011	3,690,174		$	6.83
Options Exercisable at June 30, 2011	2,731,904		$	7.13
Shares Available for Grant under the 2008 Plan	1,779,615

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2011 and 2010 was $2.54 and $2.81, respectively. The total fair value of stock options that vested during the six months ended June 30, 2011 and 2010 was $1.6 million and $1.9 million, respectively.

The aggregate intrinsic value of stock options outstanding at June 30, 2011 was $0.4 million. The aggregate intrinsic value of stock options vested and expected to vest at June 30, 2011 was $0.4 million. As of June 30, 2011, total compensation cost related to non-vested employee and non-employee director stock options not yet recognized was approximately $3.0 million, net of estimated forfeitures, which is expected to be recognized as expense over a weighted average period of 2.1 years.

Restricted Stock

A summary of restricted stock activity under the 2008 Plan for the six months ended June 30, 2011 is as follows:

	Shares		Weighted Average Grant Date Fair Value (per share)
Outstanding and unvested at December 31, 2010	9,338		$	3.96
Granted	12,000		3.24
Vested	(9,338	)	3.96
Canceled	—		—
Outstanding and unvested at June 30, 2011	12,000		$	3.24

Valuation and Expenses Information

Stock-based compensation expense related to employee and non-employee stock options, restricted stock and employee stock purchases for the three and six months ended June 30, 2011 and 2010 was recorded as follows:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
	(In thousands)
Research and development	$	344	$	393	$	705	$	909
General and administrative	209		251		428		705
Total stock-based compensation expense	$	553	$	644	$	1,133	$	1,614

The fair values of employee and non-employee director stock options and employee stock purchases granted during the three and six months ended June 30, 2011 and 2010 were valued using the Black-Scholes option-pricing model with the following assumptions:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Expected stock price volatility (options)	68	%	66	%	68	%	65-66	%
Expected stock price volatility (2004 ESPP)	70	%	51	%	70	%	51	%
Expected option term (options)	6.0 years		6.2 years		6.0 years		6.2 years
Expected option term (2004 ESPP)	0.5 years		0.5 years		0.5 years		0.5 years
Risk-free interest rate (options)	2.5	%	2.9	%	2.5-2.9	%	2.9-3.2	%
Risk-free interest rate (2004 ESPP)	0.2	%	0.2	%	0.2	%	0.2	%
Expected dividend yield	None		None		None		None