Stockholders' Equity | 12 Months Ended |
Dec. 31, 2013 |
Stockholders' Equity | ' |
NOTE 11 - STOCKHOLDERS’ EQUITY |
Preferred Stock |
Our amended and restated certificate of incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common stock. |
Common Stock |
On June 18, 2013, at the 2013 Annual Meeting of Stockholders, the Company’s stockholders approved an amendment to the Company’s amended and restated certificate of incorporation increasing the shares of authorized common stock from 95,000,000 shares to 130,000,000 shares $0.001 par value common stock. The number of authorized shares of preferred stock remains unchanged at 5,000,000 shares. |
On January 22, 2014, we announced the pricing of an underwritten public offering, whereby we sold 7,935,000 shares of our common stock at a price of $14.50 per share for gross proceeds of approximately $115.1 million. Net proceeds from this offering were approximately $107.6 million, net of underwriting discounts and offering expenses of approximately $7.5 million. The shares were sold under a Registration Statement (No. 333-190353) on Form S-3, filed by us with the Securities and Exchange Commission. This shelf registration statement on Form S-3, filed and declared effective by the SEC in August 2013, provides for the offering of up to $150 million of common stock and warrants in the aggregate. Subsequent to this underwritten public offering, there remains approximately $34.9 million of our common stock and warrants available for sale on this shelf registration statement. We may offer the securities under our shelf registration statement from time to time in response to market conditions or other circumstances if we believe such a plan of financing is in our best interests and the best interests of our stockholders. |
On January 30, 2013, we announced the pricing of an underwritten public offering, whereby we sold 9,469,100 shares of our common stock at a price of $8.49 per share for gross proceeds of approximately $80.4 million. Net proceeds from this offering were approximately $74.8 million, net of underwriting discounts and offering expenses of approximately $5.6 million. The shares were sold under Registration Statements (Nos. 333-171517 and 333-186332) on Form S-3 and Form S-3MEF, respectively, and filed by us with the Securities and Exchange Commission. |
On May 4, 2011, we announced the pricing of an underwritten registered offering of 7,021,277 shares of our common stock at a price of $4.70 per share for gross proceeds of approximately $33.0 million. Net proceeds from this offering were approximately $30.7 million, net of underwriting discounts and offering expenses of approximately $2.3 million. The shares were sold under a shelf registration statement on Form S-3 (File No. 333-171517) that was previously filed and declared effective by the SEC on January 28, 2011. |
Treasury Stock |
As of December 31, 2013 and 2012, we held a total of 79,948 shares of our common stock in treasury, at a total cost of $357,000. |
Equity Incentive Plans |
We have in effect the following stock option and incentive plans. |
a. The 1999 Stock Option Plan was adopted in November 1999. Under the 1999 Stock Option Plan, our board of directors could grant stock-based awards to directors, consultants and employees. The plan authorizes grants to purchase up to 4,230,000 shares of authorized but unissued common stock. The plan limits the term of each option, to no more than 25 years from the date of the grant, unless otherwise authorized by the board. The plan permits the board of directors or a committee appointed by the board to administer the plan. The administrator has the authority, in its discretion, to determine the terms and conditions of any option granted to a service provider, including the vesting schedule. As of December 31, 2013, no additional shares of our common stock may be issued under the 1999 Stock Option Plan. |
b. The 2004 Long-Term Incentive Plan was adopted in June 2004 by our stockholders. Under the 2004 Long-Term Incentive Plan, the compensation committee of our board of directors is authorized to grant stock-based awards to directors, consultants and employees. The 2004 plan authorizes grants to purchase up to 4,000,000 shares of authorized but unissued common stock. The plan limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2013, up to an additional 244,165 shares may be issued under the 2004 Long-Term Incentive Plan. |
c. The 2007 Incentive Plan was adopted in June 2007 by our stockholders. Under the 2007 Incentive Plan, the compensation committee of our board of directors is authorized to grant stock-based awards to directors, consultants, employees and officers. The 2007 Incentive Plan authorizes grants to purchase up to 6,000,000 shares of authorized but unissued common stock. The plan limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2013, up to an additional 9,837 shares may be issued under the 2007 Incentive Plan. |
d. The 2009 CEO Incentive Plan was adopted in May 2009. Under the 2009 CEO Incentive Plan, our board of directors granted an option to Ron Bentsur, our Chief Executive Officer, to purchase up to 600,000 shares of authorized but unissued common stock. The option has a term of 10 years from the date of grant. As of December 31, 2013, the option is fully vested and exercisable. |
e. The 2013 Incentive Plan was adopted in June 2013 by our stockholders at our 2013 Annual Meeting of Stockholders. Under the 2013 Incentive Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to directors, officers, employees and consultants. The 2013 Incentive Plan authorizes grants to purchase up to 3,500,000 shares of authorized but unissued common stock. The plan limits the term of each option to no more than 10 years from the date of their grant. As of December 31, 2013, up to an additional 2,871,000 shares may be issued under the 2013 Incentive Plan. |
Total shares available for the issuance of stock options or other stock-based awards under our stock option and incentive plans were 3,125,002 shares at December 31, 2013. |
Stock Options |
The following table summarizes stock option activity for all plans for the years ended December 31, 2013, 2012 and 2011: |
| | | | | | | | | | | | | | | | | | | | |
| | Number | | | Weighted- | | | Weighted- | | | Aggregate | | | | | |
of shares | average | average | Intrinsic | | | | |
| exercise | Contractual | Value | | | | |
| price | Term | | | | | |
Outstanding at January 1, 2011 | | | 7,638,403 | | | $ | 7.05 | | | | | | | | | | | | | |
Granted | | | 692,350 | | | | 4.53 | | | | | | | | | | | | | |
Exercised | | | (2,382,027 | ) | | | 1.3 | | | | | | | $ | 6,604,300 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Forfeited | | | (98,600 | ) | | | 4.32 | | | | | | | | | | | | | |
Expired | | | (2,333,126 | ) | | | 13.26 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2011 | | | 3,517,000 | | | | 6.4 | | | | | | | $ | 2,139,130 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Granted | | | 521,500 | | | | 2.36 | | | | | | | | | | | | | |
Exercised | | | — | | | | — | | | | | | | $ | — | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Forfeited | | | (266,621 | ) | | | 7.77 | | | | | | | | | | | | | |
Expired | | | (370,208 | ) | | | 11.02 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2012 | | | 3,401,671 | | | | 5.17 | | | | | | | $ | 2,373,509 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Granted | | | 932,366 | | | | 6.29 | | | | | | | | | | | | | |
Exercised | | | (443,813 | ) | | | 2.1 | | | | | | | $ | 4,614,741 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Forfeited | | | (44,854 | ) | | | 8.7 | | | | | | | | | | | | | |
Expired | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2013 | | | 3,845,370 | | | $ | 5.75 | | | | 6.2 | | | $ | 28,361,438 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Vested and expected to vest at December 31, 2013 | | | 3,804,543 | | | $ | 5.76 | | | | 6.2 | | | $ | 28,045,772 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Exercisable at December 31, 2013 | | | 2,519,162 | | | $ | 5.74 | | | | 5 | | | $ | 18,719,371 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
The following table summarizes information about stock options outstanding at December 31, 2013: |
| | | | | | | | | | | | | | | | | | | | |
| | Options outstanding | | | Options exercisable | |
Range of exercise prices | | Number | | | Weighted- | | | Weighted- | | | Number | | | Weighted- | |
outstanding | average | average | exercisable | average |
| remaining | exercise | | exercise |
| contractual | price | | price |
| life (years) | | | |
$ 0.10 - $ 3.00 | | | 1,698,612 | | | | 7 | | | $ | 1.64 | | | | 1,078,621 | | | $ | 1.11 | |
3.70 - 8.56 | | | 1,106,208 | | | | 7.5 | | | | 5.74 | | | | 656,991 | | | | 4.94 | |
9.34 - 14.64 | | | 1,040,550 | | | | 3.5 | | | | 12.48 | | | | 783,550 | | | | 12.78 | |
| | | | | | | | | | | | | | | | | | | | |
$ 0.10 - $ 14.64 | | | 3,845,370 | | | | 6.2 | | | $ | 5.75 | | | | 2,519,162 | | | $ | 5.74 | |
| | | | | | | | | | | | | | | | | | | | |
Upon the exercise of stock options, we issue new shares of our common stock. As of December 31, 2013, 77,500 options issued to employees and 50,000 options issued to consultants are unvested, milestone-based options. |
Restricted Stock |
Certain employees, directors and consultants have been awarded restricted stock under the 2004 Long-Term Incentive Plan and 2007 Incentive Plan. The time-vesting restricted stock grants vest primarily over a period of three to four years. The following table summarizes restricted share activity for the years ended December 31, 2013, 2012 and 2011: |
| | | | | | | | | | | | | | | | | | | | |
| | Number | | | Weighted | | | Aggregate | | | | | | | | | |
of Shares | Average | Intrinsic | | | | | | | | |
| Grant | Value | | | | | | | | |
| Date Fair | | | | | | | | | |
| Value | | | | | | | | | |
Outstanding at January 1, 2011 | | | 1,400,694 | | | $ | 1.63 | | | $ | 6,415,179 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Granted | | | 206,450 | | | | 4.49 | | | | | | | | | | | | | |
Vested | | | (957,225 | ) | | | 1.2 | | | $ | 4,650,171 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Forfeited | | | (28,338 | ) | | | 3.35 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2011 | | | 621,581 | | | | 3.16 | | | $ | 1,572,600 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Granted | | | 997,300 | | | | 1.94 | | | | | | | | | | | | | |
Vested | | | (339,954 | ) | | | 2.91 | | | $ | 965,496 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Forfeited | | | (97,250 | ) | | | 2.33 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2012 | | | 1,181,677 | | | | 2.27 | | | $ | 3,095,994 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Granted | | | 831,020 | | | | 7.68 | | | | | | | | | | | | | |
Vested | | | (568,030 | ) | | | 2.43 | | | $ | 4,612,275 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Forfeited | | | (23,737 | ) | | | 8.52 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2013 | | | 1,420,930 | | | $ | 5.27 | | | $ | 18,401,044 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
As of December 31, 2013, 390,000 and 100,000 shares of restricted stock issued to employees and consultants, respectively, are unvested, milestone-based shares. |
On September 14, 2009, we entered in an employment agreement with Ron Bentsur, our Chief Executive Officer, which was amended on January 13, 2012, and further amended on June 11, 2013. The agreement, as amended, terminates on May 20, 2015, subject to certain early termination events. As of December 31, 2013, Mr. Bentsur has been granted a total of 750,000 shares of restricted stock based on the achievement of certain milestone awards described in his employment agreement. In addition, as of December 31, 2013, Mr. Bentsur has the opportunity to earn certain milestone awards as follows: |
(1) 500,000 shares of fully vested common stock will be granted to Mr. Bentsur, upon the first to occur of (a) our first commercial sale of Zerenex in the U.S. off an approved NDA, (b) our receipt of the first royalty upon the commercial sale of Zerenex in the U.S. by a partner to whom we have sold exclusive or non-exclusive commercial rights, or (c) our complete outlicensing of the entire product rights of Zerenex in the U.S. |
(2) 100,000 shares of restricted stock will be granted to Mr. Bentsur upon each event of our outlicensing Zerenex in a foreign market, other than Japan, resulting in a greater than $10 million non-refundable cash payment to us with a gross deal value to us of at least $50 million. Such restricted stock will vest in equal installments over each of the first three anniversaries of the date of grant, provided that Mr. Bentsur remains an employee during such vesting period. |
Stock-Based Compensation |
The fair value of stock options granted is estimated at the date of grant using the Black-Scholes pricing model. The expected term of options granted is derived from historical data and the expected vesting period. Expected volatility is based on the historical volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. We have assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the foreseeable future. |
| | | | | | | | | | | | | | | | | | | | |
Black-Scholes Option Valuation Assumptions | | 2013 | | 2012 | | 2011 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Risk-free interest rates | | 0.70% | | 0.60% | | 1.40% | | | | | | | | | | | | | | |
Dividend yield | | — | | — | | — | | | | | | | | | | | | | | |
Volatility | | 102.00% | | 106.30% | | 115.00% | | | | | | | | | | | | | | |
Weighted-average expected term | | 3.8 years | | 4.0 years | | 4.0 years | | | | | | | | | | | | | | |
The weighted average grant date fair value of options granted was $4.28, $1.73 and $3.43 per option for the years ended December 31, 2013, 2012 and 2011, respectively. We used historical information to estimate forfeitures within the valuation model. As of December 31, 2013, there was $3.3 million and $5.7 million of total unrecognized compensation cost related to non-vested stock options and restricted stock, respectively, which is expected to be recognized over weighted-average periods of 2.2 years and 2.6 years, respectively. These amounts do not include, as of December 31, 2013, 127,500 options outstanding and 490,000 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones, such as FDA approval of our drug candidate and change in control. Stock-based compensation will be measured and recorded if and when it is probable that the milestone will occur. |
The following table summarizes stock-based compensation expense information about stock options and restricted stock for the years ended December 31, 2013, 2012 and 2011: |
| | | | | | | | | | | | | | | | | | | | |
| | For the year ended December 31, | | | | | | | | | |
(in thousands) | | 2013 | | | 2012 | | | 2011 | | | | | | | | | |
| | | | | | | | | | | |
Stock-based compensation expense associated with restricted stock | | $ | 3,859 | | | $ | 967 | | | $ | 1,044 | | | | | | | | | |
Stock-based compensation expense associated with option grants | | | 2,094 | | | | 1,200 | | | | 1,048 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | $ | 5,953 | | | $ | 2,167 | | | $ | 2,092 | | | | | | | | | |
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