Stock Compensation

6 Months Ended

Jun. 30, 2012

Stock Compensation [Abstract]

Stock Compensation

7. STOCK COMPENSATION

Stock Options

In general, stock options granted prior to December 31, 2010 vest over a three year period, with one-third of the underlying shares vesting on each anniversary of grant, and have a ten year term. Beginning in January 2011, stock options granted generally vest over a four year period, with one-fourth of the underlying shares vesting on the first anniversary of the grant and the remaining underlying shares vesting pro-ratably on a monthly basis thereafter, such that the underlying shares will be fully vested on the fourth anniversary of the grant. As of June 30, 2012, 2,140,566 shares of common stock remain available for future grant.

A summary of the Company’s stock option activity with respect to the six months ended June 30, 2012 follows:

Stock Options	Underlying Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2011		2,417,659		$	11.18
Granted		206,408			6.95
Exercised		(111	)		5.52
Canceled or expired		(499,118	)		10.16
Outstanding at June 30, 2012		2,124,838		$	11.01		6.68	$	13,578
Vested at June 30, 2012 and expected to vest		2,050,432		$	11.12		6.47	$	12,584
Exercisable at June 30, 2012		994,370		$	14.31		3.81	$	78

The weighted-average fair value per share of stock-based awards granted to employees during the three months ended June 30, 2012 and 2011 was $3.53 and $6.30, respectively, and during the six months ended June 30, 2012 and 2011 was $4.56 and $7.98, respectively. During the six months ended June 30, 2012 and 2011, the total intrinsic value of stock options exercised was $280 and $70,000 respectively, and the total grant date fair value of stock options that vested was $2,689,000 and $1,807,000, respectively.

Valuation Assumptions

Stock-based compensation costs are based on the fair value calculated from the Black-Scholes option-pricing model on the date of grant for stock options. The fair value of stock grants, with consideration given to estimated forfeitures, is amortized as compensation expense on a straight-line basis over the vesting period of the grants.

The fair values of stock options granted during the periods presented were measured on the date of grant using the Black-Scholes option-pricing model, with the following assumptions:

	Three and Six Months Ended June 30,
	2012			2011
Risk-free interest rate		0.8%-1.1	%		1.9%-2.4	%
Expected dividend yield		0	%		0	%
Expected lives		5.3 years			5.4-5.5 years
Expected volatility		79.7%-82.5	%		80.9%-81.6	%

Restricted Stock Units

In April 2012, the Company granted 32,377 shares of restricted stock units to employees in lieu of cash for a portion of the 2012 bonus. These shares vest over a two-year period and have a weighted average grant date fair value of $5.40 per share. The weighted-average grant-date fair value of restricted stock unit awards is based on the market price of the Company’s common stock on the date of grant. The following table sets forth restricted stock unit activity for the period shown:

	Six Months Ended June 30, 2012
	Shares			Weighted Average Grant Date Fair Value per Share
Restricted Stock Units, beginning of period		—		$	—
Granted		32,377			5.40
Vested		—			—
Forfeited or canceled		(486	)		5.40
Restricted Stock Units, end of period		31,891			5.40

Stock-based Compensation Expense

A summary of the stock-based compensation expense, including options, restricted stock units, and restricted stock, recognized in the statements of operations is as follows:

	Three Months Ended				Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
	(in thousands)				(in thousands)
Research and development	$	259	$	359	$	512	$	732
General and administrative		181		357		636		1,130
Total	$	440	$	716	$	1,148	$	1,862

As of June 30, 2012, there was $5,529,000 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted, including stock options, restricted stock units and restricted stock. These costs are expected to be recognized over a weighted-average period of 3.0 years.