Quarterly report pursuant to Section 13 or 15(d)

Common Stock

Common Stock
3 Months Ended
Mar. 31, 2012
Common Stock [Abstract]  



[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 its 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 three month period ended March 31, 2012 the Company issued 300 common shares (period ended March 31, 2011 – 24,660) to satisfy stock option exercises.


[c] Stock options

2010 Performance Incentive Plan

As of March 31, 2012 the Company has reserved, pursuant to various plans, 1,565,218 common shares for issuance upon exercise of stock options by employees, directors, officers and consultants of the Company, of which 765,594 are reserved for options currently outstanding, and 799,624 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, typically over 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

    —         —    

Option expirations

    (434     3.89  

Option exercises

    (300     3.00  

Option forfeitures

    —         —    







Balance, March 31, 2012

    765,594       9.83  


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:


    Three months ended
March 31,
    2012     2011  

Risk-free interest rates

    —         2.74

Expected dividend yield

    —         0

Expected life

    —         7 years  

Expected volatility

    —         75

The expected life was calculated based on the simplified method as permitted by the SEC’s Staff Accounting Bulletin 110, Share-Based Payment. The computation of expected volatility was based on the historical volatility of comparable companies from a representative peer group selected based on industry and market capitalization. The Company considers the use of these methods of calculating expected term and volatility appropriate because of the lack of sufficient historical exercise data following the reverse takeover of Sonus Pharmaceuticals, Inc., or Sonus. 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  
  March 31,  

(In thousands)

  2012     2011  
    $     $  

Research and development

    135       121  

General and administrative

    185       150  







Total share-based compensation

    320       271  

As of March 31, 2012 and December 31, 2011 the total unrecognized compensation expense related to stock options granted is $2,355,551 and $2,675,100 respectively, which is expected to be recognized into expense over a period of approximately four years.

As of March 31, 2012 and December 31, 2011 a total of 2,352,895 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] Stock Warrants

As of March 31, 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 three months ended March 31, 2012 or three months ended March 31, 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:



Three Months Ended

March 31,

    2012     2011  

Risk-free interest rates

    0.66     2.21

Expected dividend yield

    0     0

Expected life

    3.6 years       4.6 years  

Expected volatility

    77     75