Quarterly report pursuant to Section 13 or 15(d)

Common Stock

v2.4.0.6
Common Stock
 9 Months Ended
Sep. 30, 2012
Common Stock [Abstract]  
COMMON STOCK
5. COMMON STOCK

 

[a] Authorized

25,000,000 authorized common shares, par value of $0.001, and 5,000,000 preferred shares, par value of $0.001.

 

[b] Issued and Outstanding Shares

March 2012 Public Offering

On March 21, 2012, the Company completed a public offering of 4,165,000 shares of its common stock at a purchase price of $12.00 per share. Pursuant to an overallotment option exercised on March 27, 2012 by the underwriters in the offering, an additional offering of 624,750 shares of the Company’s common stock were issued at a price of $12.00 per share. The total gross offering amount from the public offering and exercise of the overallotment option was approximately $57.5 million. The total net proceeds to the Company from the public offering and exercise of the overallotment option, after deducting underwriting discounts and commissions and other offering expenses from the sale of the shares were approximately $53.8 million.

During the nine month period ended September 30, 2012 the Company issued 116,834 common shares to satisfy stock option exercises, compared to the issuance of 54,761 common shares to satisfy stock option exercises during the nine month period ended September 30, 2011.

 

[c] Stock options

2010 Performance Incentive Plan

As of September 30, 2012 the Company has reserved, pursuant to various plans, 1,273,770 common shares for issuance upon exercise of stock options by employees, directors, officers and consultants of the Company, of which 790,494 are reserved for options currently outstanding, and 483,276 are available for future option grants.

Stock Option Summary

Options vest in accordance with terms as determined by the Board of Directors of the Company, or the Board, which terms are typically four years for employee grants and one to three years for Board option grants. The expiry date for each option is set by the Board, which is typically seven to ten years. The exercise price of the options is determined by the Board, but generally will be at least equal to the fair value of the share at the grant date.

Stock option transactions and the number of stock options outstanding are summarized below:

 

                 
    Number
of		     Weighted  
  Optioned     Average  
  Common     Exercise  
  Shares     Price  
    #     $  

Balance, December 31, 2011

     766,328       9.82  

Option grants

     157,850       13.02  

Option expirations

     (12,309 )      9.10  

Option exercises

     (116,834 )      3.94  

Option forfeitures

     (4,541 )      15.26  
   

 

 

    

 

 

  

Balance, September 30, 2012

     790,494       11.31  

 

The fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model based on the weighted-average assumptions noted in the following table:

 

                 
    Nine months ended
September 30,		  
    2012     2011  

Risk-free interest rates

     0.96 %      2.16 % 

Expected dividend yield

     0 %      0 % 

Expected life

     6 years       6 years  

Expected volatility

     95.47 %      76.0 % 

The expected life was calculated based on the simplified method as permitted by the SEC’s Staff Accounting Bulletin 110, Share-Based Payment. As the Company has concluded that it now has sufficient historical share price data to estimate the volatility of the Company’s stock options the expected volatility of options granted in 2012 was calculated based on the historical volatility of the shares of the Company’s common stock. The computation of expected volatility of options granted prior to 2012 was based on the historical volatility of comparable companies from a representative peer group selected based on industry and market capitalization. The risk-free interest rate was based on a U.S. Treasury instrument whose term is consistent with the expected life of the stock options. In addition to the assumptions above, as required under ASC 718, management made an estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest.

The results for the periods set forth below included share-based compensation expense in the following expense categories of the consolidated statements of loss:

 

                                 
    Three Months
Ended
September 30,		     Nine Months  Ended
September 30, 		 

(In thousands)

   2012     2011     2012     2011  
    $     $     $     $  

Research and development

     243       250       671       493  

General and administrative

     338       62       939       373  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total share-based compensation

     581       312       1,610       866  

As of September 30, 2012 and December 31, 2011, the total unrecognized compensation expense related to stock options granted was $3.0 million and $2.7 million respectively, which is expected to be recognized as expense over a period of approximately four years.

 

As of September 30, 2012 and December 31, 2011, a total of 2,377,795 and 2,353,629 options and warrants, respectively, have not been included in the calculation of potential common shares as their effect on diluted per share amounts would have been anti-dilutive.

 

[d] Restricted Stock Awards

The Company grants restricted stock awards that generally vest and are expensed over a four year period. In 2012, the Company also granted restricted stock awards that vest in conjunction with certain performance conditions to certain executive officers and key employees. At each reporting date, the Company is required to evaluate whether achievement of the performance conditions is probable. Compensation expense is recorded over the appropriate service period based upon the Company’s assessment of accomplishing each performance provision. For the three and nine months ended September 30, 2012, $0.2 million and $0.4 million, respectively, was recognized related to these awards. No restricted stock awards were granted during 2011.

The following table summarizes the Company’s restricted stock award activity during the nine months ended September 30, 2012 and 2011:

 

                                 
    2012     2011  
    Stock
Awards
# 		    Weighted-
Average
Grant
Date
Fair
Value
$ 		    Stock
Awards
# 		    Weighted-
Average
Grant
Date
Fair
Value
$ 		 

Outstanding January 1

     —         —         —         —    

Granted

     172,685       13.03       —         —    

Vested

     —         —         —         —    

Forfeited and expired

     (8,000 )      13.00       —         —    
   

 

 

    

 

 

    

 

 

    

 

 

  

Outstanding September 30

     164,685       13.03       —         —    

As of September 30, 2012, the Company had approximately $0.8 million in total unrecognized compensation expense related to the Company’s restricted stock awards that is to be recognized over a weighted-average period of approximately 3.06 years.

 

[e] Stock Warrants

As of September 30, 2012, there were exercisable warrants outstanding to purchase 1,587,301 shares of common stock at an exercise price of $20 per share, expiring in October 2015. No warrants were exercised during the nine months ended September 30, 2012 or nine months ended September 30, 2011.

The estimated fair value of warrants issued is reassessed at each balance sheet date using the Black-Scholes option pricing model. The following assumptions were used to value the warrants on the following balance sheet dates:

 

                 
   

Nine Months Ended

September 30,

  
    2012     2011  

Risk-free interest rates

     0.32 %      0.71 % 

Expected dividend yield

     0 %      0 % 

Expected life

     3.06 years       4.06 years  

Expected volatility

     50.67 %      76.00 %