Share Based Payments

9 Months Ended

Sep. 30, 2012

Share Based Payments [Abstract]

Share Based Payments

6. Share Based Payments

The Company’s stock-based compensation plans include the 1996 Stock Option Plan and the 2005 Stock Plan, as well as options outstanding under Trimeris, Inc.’s 1993 Plan and 2007 Stock Incentive Plan. The Board of Directors has the authority to determine to whom options will be granted, the number of shares, the term, and the exercise price.

At the Company’s annual meeting of stockholders held June 27, 2012, stockholders approved amendments to the 2005 Stock Plan to increase the number of shares of common stock available for issuance by 1.5 million shares, increasing the maximum number of shares that may be issued under the 2005 Stock Plan to approximately 3.0 million shares. Shares subject to outstanding awards under the 2005 Stock Plan totaled 2.3 million as of September 30, 2012.

In addition, at the Company’s annual meeting of stockholders held June 27, 2012, stockholders approved the 2012 Employee Stock Purchase Plan, which allows eligible employees to use payroll deductions to purchase shares of the Company’s common stock at a discount of 15%. The plan is considered a compensatory employee stock purchase plan, and will result in incremental stock-based compensation expense in future periods. The first option period began on August 1, 2012 and will conclude on December 31, 2012. Hereafter, option periods under the plan will generally run from January 1 to June 30 and July 1 to December 31 of each year.

Determining the Fair Value of Stock Options

The Company uses the Black-Scholes option pricing model to measure the fair value of its option awards. The fair value of each stock option grant is estimated on the date of grant. The expected life assumption is based on an analysis of reported data for a peer group of companies, the limited exercise historical experience at the Company, management’s expectations based on the length of time that an employee will stay at the Company, the vesting period of four years and the contractual term of ten years. Volatility has been determined based on an analysis of reported data for a peer group of companies that granted options with substantially similar terms. The risk-free interest rate is based on the rate of U.S. Treasury zero coupon rate with a remaining term approximating the expected term used as the input to the Black-Scholes option pricing model. Our Black-Scholes assumptions for options granted in the first half of fiscal 2012 were consistent with those disclosed in Note 9, Share Based Payments, of the Company’s financial statements included in the Annual Report on Form 10-K/A for the year ended December 31, 2011.

A summary of stock option activity under all equity plans for the three and nine months ended September 30, 2012 is as follows:

	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2011		2,371		$	15.34
Options granted		26			32.90
Options exercised		(82	)		3.48
Options canceled or expired		(11	)		16.03
Outstanding at March 31, 2012		2,304		$	15.96
Options granted		616			40.74
Options exercised		(136	)		1.27
Options canceled or expired		(34	)		112.92
Outstanding at June 30, 2012		2,750		$	21.03
Options granted		—			—
Options exercised		(123	)		3.84
Options canceled or expired		(34	)		22.72
Outstanding at September 30, 2012		2,593		$	21.82

The Company recognized stock-based compensation expense on all stock option awards for the three and nine months ended September 30, 2012 and 2011, as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Research and development	$	495	$	35	$	926	$	94
General and administrative		1,060		101		2,141		198
	$	1,555	$	136	$	3,067	$	292