Stockholders' Deficit

12 Months Ended

Dec. 31, 2012

Stockholders' Deficit

Stockholders' Deficit

Note 9. Stockholders' Deficit

        Preferred Stock.    We are authorized to issue 5,000,000 shares of preferred stock, none of which was outstanding as of December 31, 2012 and 2011. The Board of Directors may determine the rights, preferences and privileges of any preferred stock issued in the future.

        Common Stock.    We are authorized to issue 400,000,000 shares of common stock.

        Stock Compensation Plans.    As of December 31, 2012, we had reserved a total of 28,712,156 shares of our common stock for future issuance related to our stock plans as described below. Summaries of stock option activity for our stock option plans as of December 31, 2012, 2011 and 2010, and related information for the years ended December 31 are included in the plan descriptions below.

        2010 Stock Incentive Plan.    In May 2010 the Board of Directors adopted the 2010 Stock Incentive Plan (the "2010 Plan") for issuance of common stock to employees, non-employee directors, consultants, and scientific advisors. Options granted to employees, consultants, and scientific advisors under the 2010 Plan vest over three years, pursuant to a formula determined by our Board of Directors, and expire after seven years. Each new non-employee director joining the Board will receive an option to purchase 35,000 shares of common stock which vest over four years. Additionally, members who continue to serve on the Board will receive annual option grants for 20,000 shares exercisable in full on the first anniversary of the date of the grant. All options are exercisable at the fair market value of the stock on the date of grant. Non-employee director options expire after ten years. In May 2010, our stockholders approved the number of shares of common stock reserved for issuance under the 2010 Plan of 5,400,000 plus the number of shares of Common Stock previously approved by our stockholders and remaining available for issuance and not subject to outstanding awards under the 1991 Stock Plan (the "1991 Plan") and the 1993 Directors' Stock Option Plan (the "Directors' Plan"), which was 653,475 shares. Upon the approval of the 2010 Plan, no further grants could be made under the 1991 Plan or the Directors' Plan. In May 2011, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 6,053,475 to 12,553,475. In May 2012, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 12,553,475 to 16,553,475.

        Activity under the combined plans was as follows:

				Shares Subject to Outstanding Options
	Shares Available for Grant			Shares			Weighted Average Exercise Price
Balance at December 31, 2009		3,487,333			17,980,691		$	7.71
Additional authorization		5,400,000			—			—
Options granted		(4,138,584	)		4,138,584		$	10.87
Options exercised		—			(1,701,368	)	$	6.56
Options expired		—			(650	)	$	32.13
Options cancelled		37,945			(309,334	)	$	8.54
Balance at December 31, 2010		4,786,694			20,107,923		$	8.44
Additional authorization		6,500,000			—			—
Options granted		(5,095,333	)		5,095,333		$	15.12
Options exercised		—			(2,294,586	)	$	7.17
Options expired		—			(592,085	)	$	17.44
Options cancelled		264,740			(320,006	)	$	13.89
Balance at December 31, 2011		6,456,101			21,996,579		$	9.78
Additional authorization		4,000,000			—			—
Options granted		(5,469,000	)		5,469,000		$	18.12
Options exercised		—			(5,117,374	)	$	8.51
Vesting of restricted stock units		—			(50,000	)		—
Options expired		—			(44,167	)	$	6.14
Options cancelled		419,176			(437,427	)	$	16.02
Balance at December 31, 2012		5,406,277			21,816,611		$	12.05

        Options to purchase a total of 14,596,823, 15,604,786 and 14,795,496 shares as of December 31, 2012, 2011 and 2010, respectively, were exercisable and vested. The aggregate intrinsic value of options exercised for the years ended December 31, 2012, 2011 and 2010 were $61.3 million, $23.5 million and $12.3 million, respectively. At December 31, 2012 the aggregate intrinsic value of options outstanding and vested options are $108.1 million and $104.4 million, respectively.

        The following table summarizes information about stock options outstanding as of December 31, 2012 for the 2010 Plan:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$2.46 - $5.46		3,148,878		2.94	$	4.00		3,148,878	$	4.00
$5.68 - $8.19		2,303,562		1.50	$	7.24		2,303,562	$	7.24
$8.57 - $9.41		3,442,503		3.12	$	9.21		3,379,907	$	9.20
$9.50 - $11.98		2,389,622		2.38	$	11.71		2,362,312	$	11.71
$12.00 - $14.60		1,018,565		5.05	$	13.40		826,769	$	13.39
$14.72 - $14.72		2,957,457		5.04	$	14.72		1,850,947	$	14.72
$14.74 - $17.50		1,406,024		5.81	$	16.23		461,224	$	15.80
$17.79 - $17.79		3,940,000		6.03	$	17.79		—	$	—
$17.89 - $22.48		1,063,000		6.59	$	19.60		263,224	$	18.86
$24.84 - $24.84		97,000		6.50	$	24.84		—	$	—
		21,766,611						14,596,823

        The above table excludes restricted stock units. In December 2011, 100,000 restricted stock units were granted, of which 50,000 vested in December 2012.

        Employee Stock Purchase Plan.    On May 21, 1997, our stockholders adopted the 1997 Employee Stock Purchase Plan (the "ESPP"). In May 2010, our stockholders approved an increase in the number of shares available for grant from 5,350,000 shares to 7,350,000 shares. In May 2011, our stockholders approved an increase in the number of shares available for grant from 7,350,000 shares to 8,350,000 shares. Each regular full-time and part-time employee working 20 hours or more per week is eligible to participate after one month of employment. We issued 378,041, 896,939 and 1,182,929 shares under the ESPP in 2012, 2011 and 2010, respectively. For the year ended December 31, 2012, 2011 and 2010 we recorded stock compensation expense of $1.4 million, $1.0 million and $0.8 million, respectively, as the ESPP is considered compensatory under the FASB stock compensation rules. As of December 31, 2012, 1,489,268 shares remain available for issuance under the ESPP.