11. Stock-Based Compensation

The Company awards stock options and other equity-based instruments to its employees, directors and consultants and provides employees the right to purchase common stock (collectively “share-based payments”), pursuant to stockholder approved plans. The Company’s statement of operations included total compensation cost from share-based payments for the years ended December 31, as follows:

In thousands	2011		2010		2009
Compensation cost from:
Stock options	$	2,893	$	1,879	$	3,068
Stock and stock units		4,601		2,834		1,096
Purchases of common stock at a discount		181		123		191
	$	7,675	$	4,836	$	4,355
Compensation cost included in:
Research and development expenses	$	3,782	$	2,444	$	2,123
General and administrative expenses		3,893		2,392		2,232
	$	7,675	$	4,836	$	4,355

Stock Options

Stock options are granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. Stock options generally vest ratably over four years and have contractual terms of ten years. Stock options are valued using the Black-Scholes option valuation model and compensation cost is recognized based on such fair value over the period of vesting on a straight-line basis.

The following table summarizes information about stock options as of and for the years ended December 31, 2011, 2010 and 2009:

In thousands, except per share amounts	2011		2010		2009
Weighted average fair value of options granted, per share	$	5.80	$	2.43	$	1.03
Total cash received from exercises of stock options		4,648		418		206
Total intrinsic value of stock options exercised		5,169		331		271

The weighted average fair value of options granted in the years ended December 31, 2011, 2010 and 2009, reflect the following weighted-average assumptions:

	2011		2010		2009
Expected life of options granted (in years)	7.48		6.75		7.04
Expected volatility	74.77	%	78.54	%	70.68	%
Risk-free rate	2.53	%	2.57	%	2.75	%
Expected dividends	0	%	0	%	0	%

The expected life assumption is based on an analysis of historical behavior of participants related to options awarded over time. The expected volatility assumption for the years ended December 31, 2011, 2010 and 2009 is based on the implied volatility of the Company’s common stock, derived from analysis of historical traded and quoted options on the Company’s common stock over the period commensurate with the expected life of the options granted. The risk-free rate is based on the forward U.S. Treasury yield curve. The expected dividends reflect the Company’s current and expected future policy for dividends on its common stock.

Stock option activity under the Company’s stock plans for the year ended December 31, 2011 was as follows:

	Number of Shares		Weighted Average Exercise Price Per Share
Options outstanding, January 1, 2011		7,177,191	$	4.42
Granted		1,599,519	$	8.05
Forfeited		225,295	$	4.16
Exercised		1,170,086	$	4.40
Options outstanding, December 31, 2011		7,381,329	$	5.22

The following table summarizes information about stock options outstanding as of December 31, 2011:

	Options Outstanding		Options Exercisable		Options Vested and Expected To Vest
Number of options		7,381,329		5,055,872		7,066,555
Weighted average exercise price per share	$	5.22	$	4.84	$	5.21
Aggregate intrinsic value (in 000’s)	$	51,878	$	37,468	$	49,717
Weighted average remaining contractual term	5.52 years		4.07 years		5.38 years

Options expected to vest consist of options scheduled to vest in the future less expected forfeitures.

At December 31, 2011, total unrecognized compensation cost related to non-vested stock options outstanding amounted to $7.1 million. That cost is expected to be recognized over a weighted-average period of 2.85 years.

Stock and Stock Unit Grants

Stock and stock unit grants are provided to non-employee directors as compensation and generally carry no restrictions as to resale or are fully vested upon grant. Stock and stock unit grants to officers carry restrictions as to resale for periods of time or vesting provisions over time as specified in the grant. Stock and stock unit grants are valued at the closing market price of the Company’s common stock on the date of grant and compensation expense is recognized over the requisite service period, vesting period or period during which restrictions remain on the common stock or stock units granted.

Stock and stock unit activity under the Company’s stock plans for the year ended December 31, 2011 was as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding, January 1, 2011		2,779,300	$	2.83
Granted		1,255,681	$	7.43
Forfeited		115,632	$	4.05
Vested or restrictions lapsed		1,134,323	$	3.69
Outstanding, December 31, 2011		2,785,026	$	4.51

Included in stock and stock units granted in the above table are 392,500 performance share units that will vest upon regulatory approval of ponatinib by the U.S. Food and Drug Administration on or before December 31, 2016. Compensation expense related to these performance share units will be recognized upon achieving such regulatory approval.

At December 31, 2011, total unrecognized compensation cost related to time-vested stock and stock unit awards amounted to $5.5 million. That cost is expected to be recognized over a weighted average of 1.82 years. Unrecognized compensation cost related to stock units with performance-based vesting conditions was $3.1 million at December 31, 2011. Compensation expense for these awards will begin to be recognized when vesting is probable. The total fair value of stock and stock unit awards that vested in 2011, 2010 and 2009 was $8.0 million, $1.6 million and $279,000, respectively.

Purchase of Common Stock Pursuant to Employee Stock Purchase Plan

Purchases of common stock by employees are provided pursuant to the Company’s employee stock purchase plan. Purchase price is calculated as 85 percent of the lower of the closing price of our common stock on the first trading day or last trading day of each calendar quarter. Compensation cost is equal to the fair value of the discount on the date of grant and is recognized as compensation in the period of purchase.