STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2013 |
Stockholders' Equity Note [Abstract] | ' |
STOCKHOLDERSb EQUITY | ' |
(8) STOCKHOLDERS’ EQUITY |
(a) CAPITAL STOCK |
In January 2014, we filed a $75.0 million shelf registration statement on Form S-3 (the 2014 shelf registration statement), with the Securities and Exchange Commission. The 2014 shelf registration statement was declared effective February 11, 2014 and allows us to obtain financing through the issuance of any combination of common stock, preferred stock or warrants. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75.0 million. As of March 24, 2014, pursuant to the Equity Distribution Agreement and the Registered Direct Offering described below we have sold approximately $11.6 million of securities since February 11, 2014. |
On February 11, 2014, we entered into an Equity Distribution Agreement (the EDA) with Roth Capital Partners, LLC (Roth Capital Partners), pursuant to which we may sell from time to time up to $10.0 million of shares of our common stock, par value $0.001 per share, through Roth Capital Partners (the ATM Offering). Sales of shares in the ATM Offering, if any, may be made by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation directly on the NASDAQ Capital Market, or any other existing trading market for the shares or through a market maker, or, if agreed by the Company and Roth Capital Partners, by any other method permitted by law, including but not limited to in negotiated transactions. The ATM Offering is being made pursuant to the 2014 shelf registration statement. We intend to use the net proceeds from the sale of shares in the ATM Offering, if any, for operating costs, working capital and general corporate purposes. At the time of the registered direct offering described immediately below, we suspended the ATM Offering. We will continue to evaluate whether to resume the ATM offering in the future. As of March 18, 2014, we had sold 721,677 shares in the ATM Offering for gross proceeds of approximately $2.6 million. |
On March 18, 2014, we sold 2,870,000 shares of our common stock in a registered direct offering pursuant to the 2014 shelf registration statement (the Registered Direct Offering), at a price of $3.15 per share, resulting in net proceeds of approximately $8.4 million. We intend to use the net proceeds from the sale of shares in the Registered Direct Offering for operating costs, working capital and general corporate purposes. |
In September 2001, our Board of Directors of the Company adopted a Stockholders Rights Plan, and in connection therewith declared a dividend which was issued on September 28, 2001 of one preferred stock purchase right (a Right) for each share of common stock outstanding. The Rights would become exercisable only if a person or group acquired beneficial ownership of 20 percent or more of the outstanding common stock of GenVec (an Acquiring Person), or announced the intention to commence a tender or exchange offer the consummation of which would result in that person or group becoming an Acquiring Person. The Stockholder Rights Plan expired in September 2011. |
In August 2011, the Company’s Board of Directors adopted a new Stockholder Rights Agreement between the Company and American Stock Transfer & Trust Company, LLC, as rights agent, to be effective on September 7, 2011 upon expiration of the prior Stockholder Rights Agreement. The new Stockholder Rights Agreement was not adopted in response to any specific effort to acquire control of the Company. In connection with the adoption of the new Stockholder Rights Agreement, the Company’s Board of Directors declared a dividend of one preferred stock purchase right, or Right, for each outstanding share of common stock to stockholders of record as of the close of business on September 7, 2011. Initially, the Rights will be represented by GenVec's common stock certificates or book entry notations, will not be traded separately from the common stock and will not be exercisable. In the event that any person acquires beneficial ownership of 20% or more of the outstanding shares of GenVec's common stock, or upon the occurrence of certain other events, each holder of a Right, other than the acquirer, would be entitled to receive, upon payment of the purchase price, which is initially set at $32 per Right, a number of shares of GenVec common stock having a value equal to two times such purchase price. The Company’s Board of Directors is entitled to redeem the Rights at $0.001 per right at any time before a person or group has acquired 20% or more of the Company’s common stock. The Rights will expire on September 7, 2021, subject to the Company’s right to extend such date, unless earlier redeemed or exchanged by the Company or terminated. The Rights will at no time have any voting rights. The Company has authorized 30,000 shares of Series B Junior Participating Preferred Stock in connection with the adoption of the new Stockholder Rights Agreement. There was no Series B Junior Participating Preferred Stock issued or outstanding as of December 31, 2013 or December 31, 2012. |
In addition to the common stock reflected on our balance sheets, the following items are reflected in the capital accounts as of December 31, 2013 and 2012: |
| ⋅ | 4,400,000 shares of $0.001 par value preferred stock have been authorized; none are issued or outstanding. | | | | | | | | | | | | | | |
| ⋅ | 600,000 shares of $0.001 par value Series A junior participating preferred stock have been authorized in connection with the preferred stock purchase rights referred to above; none are issued or outstanding. | | | | | | | | | | | | | | |
(b) STOCK-BASED COMPENSATION |
Stock Incentive Plans |
Our stockholders approved the 2011 Omnibus Incentive Plan (2011 Plan) in June 2011. In July 2012 at the Company’s 2012 Annual Meeting of Stockholders, the stockholders of GenVec, Inc. (the “Company”) approved an amendment to the GenVec, Inc. Omnibus Incentive Plan (the “2011 Plan”) to increase the number of shares of common stock that are available to be issued through grants or awards made thereunder or through the exercise of options granted thereunder by 640,000 shares. On September 3, 2013, the Board of Directors of the Company acted to award shares of restricted stock pursuant to the 2011 Plan and thereby amended the Plan to provide that the limitation in Section 6.2(b) of the 2011 Plan on the maximum number of shares of stock that may be granted under the 2011 Plan, other than pursuant to Options or SARs (as those terms are defined in the 2011 Plan), in a calendar year was increased to 200,000 shares for purposes of those awards. In November 2013 at the Company’s 2013 Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2011 Plan to increase the number of shares of common stock that are available to be issued through grants or awards made thereunder or through the exercise of options granted thereunder by 500,000 shares. At December 31, 2013 there are 1,035,125 shares available for future issuance and 1,345,542 outstanding options and 730,000 outstanding restricted stock awards under the 2011 Plan, CEO incentive, and 2002 Plan. Options outstanding under the 2011 Plan at December 31, 2013 expire through 2023. Restricted stock awards generally vest over a two-year term, with 100% vesting two years after issuance. In 2013, no restricted stock awards vested. |
Stock options granted under the 2011 Plan generally have a contractual term of 10 years. and will vest and become exercisable as to one-eight (1/8th) of the shares of common stock covered by the option on the six month anniversary of the grant date and, on the first day of each month thereafter the option will vest and become exercisable as to an additional one-forty-eighth (1/48th) of the shares of common stock covered by the option until the option is fully exercisable. The Compensation Committee administers the 2011 Plan, approves the individuals to whom options, restricted stock, or other awards will be granted, and determines the terms of the awards, including the number of shares granted and exercise price of each option. |
The 2011 Plan replaces the 2002 Stock Incentive Plan (2002 Plan), which was approved in June 2002 as the replacement for the 1993 Stock Incentive Plan (1993 Plan). There are 371,876 outstanding options and no outstanding restricted stock awards under the 2002 Plan at December 31, 2013. Options outstanding under the 2002 Plan at December 31, 2013 expire through 2021. Restricted stock awards under the 2002 Plan generally vest over a three-year term, with 50% vesting two years after issuance and 50% vesting three years after issuance. In 2012, all 11,750 remaining outstanding restricted stock awards issued under the 2002 Plan vested on October 14, 2012. |
In May 2012, the Company granted an Inducement Award to purchase shares of common stock to our then President and Chief Executive Officer pursuant to a CEO inducement award agreement. The Inducement Award allows for the purchase of up to 250,000 shares of common stock at an exercise price per share equal to $2.54. The option has a ten-year term and will vest and become exercisable as to one-eighth ( 1/8th) of the shares of common stock covered by the option on the six month anniversary of the grant date and, on the first day of each month thereafter the option will vest and become exercisable as to an additional one-forty-eighth ( 1/48th) of the shares of common stock covered by the option until the option is fully exercisable. When Ms. Collins departed the Company she forfeited her unvested shares as of September 3, 2013. There are 83,333 outstanding options awards under the CEO inducement plan at December 31, 2013. |
Stock-Based Compensation Expense |
The following table summarizes stock-based compensation expense related to employee stock options for the years ended December 31, 2013 and 2012, which was allocated as follows: |
|
| | Years ended December 31, | | | | | | | | | | |
| | 2013 | | 2012 | | | | | | | | | | |
| | (in thousands) | | | | | | | | | | |
Research and development | | $ | 472 | | $ | 864 | | | | | | | | | | |
General and administrative | | | 408 | | | 415 | | | | | | | | | | |
| | $ | 880 | | $ | 1,279 | | | | | | | | | | |
We use the Black-Scholes pricing model to value stock options. The weighted-average estimated fair value of employee stock options granted during the 12 months ended December 31, 2013 and 2012 was calculated using the Black-Scholes model with the following weighted-average assumptions: |
|
| | 2013 | | | 2012 | | | | | | | | | |
Weighted average risk-free interest rate | | | 1.06 | % | | | 1.05 | % | | | | | | | | |
Expected dividend yield | | | 0 | % | | | 0 | % | | | | | | | | |
Expected volatility | | | 98.09 | % | | | 97.97 | % | | | | | | | | |
Expected life (years) | | | 6.1 | | | | 6.3 | | | | | | | | | |
Weighted-average fair value of options granted | | $ | 1.23 | | | $ | 1.99 | | | | | | | | | |
The risk-free interest rate assumption is based upon various U.S. Treasury rates as of the date of the grants, ranging from 1.00 percent to 1.85 percent and 0.81 percent to 1.66 percent, respectively, for the years ended December 31, 2013 and 2012. The dividend yield is based on the assumption that we are not expected to declare a dividend over the life of the options. The volatility assumption for 2013 and 2012 is based on the weighted average volatility for the most recent one-year period as well as the volatility over the expected life of 6.10 and 6.30, respectively. The expected life of employee stock options represents the weighted average combining the actual life of the options that have already been exercised or cancelled with the expected life of all outstanding options. The expected life of outstanding options is calculated assuming the options will be exercised at the midpoint of the vesting date and the full contractual term. |
The Company estimates forfeiture rates at the time of grant and revises these estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on the demographics of current option holders and standard probabilities of employee turnover. Stock-based compensation expense recognized in the statement of operations for the year ended December 31, 2013 and 2012 has been adjusted for actual forfeitures during the respective periods. We do not record tax-related effects on stock-based compensation given our historical and anticipated operating experience and offsetting changes in our valuation allowance which fully reserves against potential deferred tax assets. |
Stock Options |
The activity of the plans from December 31, 2011 to December 31, 2013 is as follows: |
|
(in thousands, except per share data) | | Number of Shares Under Option | | Weighted Average | Weighted Average | | Aggregate | | | | |
Exercise Price | Contractual Life | Intrinsic Value | | | |
| (years) | | | | |
Outstanding at December | | | 1,021 | | | 14.77 | | | | | | | | | | |
31, 2011 | | | |
Granted | | | 1,006 | | | 2.48 | | | | | | | | | | |
Cancelled | | | -618 | | | 12.34 | | | | | | | | | | |
Outstanding at December | | | 1,409 | | | 7.06 | | | | | | | | | | |
31, 2012 | | | |
Granted | | | 676 | | | 1.57 | | | | | | | | | | |
Exercised | | | — | | | — | | | | | | | | | | |
Forfeited | | | -551 | | | 2.29 | | | | | | | | | | |
Cancelled | | | -188 | | | 13.55 | | | | | | | | | | |
Stock options outstanding | | | 1,346 | | $ | 5.35 | | | 7.6 | | $ | 306 | | | | |
at December 31, 2013 | | | |
Vested or expected to vest | | | 1,281 | | $ | 5.52 | | | 7.5 | | $ | 271 | | | | |
at December 31, 2013 | | | |
Exercisable at December | | | 919 | | $ | 6.88 | | | 7 | | $ | 77 | | | | |
31, 2013 | | | |
Unrecognized stock-based compensation expense related to stock options was approximately $0.5 million as of December 31, 2013. This amount is expected to be expensed over a weighted average period of 2.5 years. There were no stock options exercised during the years ended December 31, 2013 or 2012. |
The following table summarizes information about our stock options outstanding at December 31, 2013: |
|
| | Outstanding | | Exercisable | |
Range of exercise prices | | Number of shares | | Weighted average remaining | | Weighted average | | Number of shares | | Weighted average | |
contractual life | exercise price | exercise price |
| (number of shares in thousands) | |
$0.00 – $10.00 | | | 1,126 | | | 8.3 | | $ | 2.53 | | | 701 | | $ | 2.86 | |
$10.01 – $20.00 | | | 124 | | | 3.2 | | | 15.82 | | | 124 | | | 15.82 | |
$20.01 – $30.00 | | | 83 | | | 5 | | | 23.57 | | | 81 | | | 23.59 | |
$30.01 – $41.00 | | | 13 | | | 0.7 | | | 33.21 | | | 13 | | | 33.21 | |
| | | 1,346 | | | 7.6 years | | $ | 5.35 | | | 919 | | $ | 6.88 | |
As of December 31, 2013 options covering 919,224 shares were exercisable at $1.56 to $41.00 per share (average $6.88 per share) and options covering 1,035,125 shares remain available to be granted. |
Restricted Stock Awards |
In September 2013, the Company issued 730,000 restricted shares of common stock under the 2011 Plan. The following table summarizes the status of the Company’s unvested restricted stock as of December 31, 2013: |
|
(in thousands, except per share data) | | Number of Shares | | Weighted Average Grant | | Aggregate Intrinsic | | | | | | | |
Date Fair Value | Value | | | | | | |
Non-vested RSU's at December 31, 2011 | | | 20 | | $ | 7.9 | | | | | | | | | | |
Granted | | | — | | | — | | | | | | | | | | |
Vested | | | -12 | | | — | | | | | | | | | | |
Forfeited | | | -8 | | | — | | | | | | | | | | |
Non-vested RSU's at December 31, 2012 | | | — | | | — | | | | | | | | | | |
Granted | | | 730 | | | 0.27 | | | | | | | | | | |
Vested | | | — | | | — | | | | | | | | | | |
Forfeited | | | — | | | — | | | | | | | | | | |
Non-vested restricted stock units at | | | 730 | | $ | 0.27 | | $ | 194 | | | | | | | |
December 31, 2013 | | | | | | |
Expected to vest at December 31, 2013 | | | 582 | | $ | 0.27 | | $ | 155 | | | | | | | |
Restricted stock awarded in 2013 vests 100% two years after the date of grant. The cost of the grant is charged to operations over the vesting period. Unrecognized stock-based compensation expense related to restricted stock units was approximately $0.2 million as of December 31, 2013. This amount is expected to be expensed over a weighted average period of 1.7 years. |
(c) WARRANTS |
Warrants to purchase common stock were granted to organizations and institutions in conjunction with certain licensing and funding activities. The warrants typically vest six-months after issuance. Outstanding warrants are summarized below (in thousands, except per share amounts): |
|
Offering Date | | Outstanding Warrants | | Exercise Price | | Expiration Date | | Status | | | | |
May-09 | | | 711,539 | | $ | 8.58 | | | 5/29/14 | | | Exercisable | | | | |
Feb-10 | | | 420,000 | | $ | 27.5 | | | 2/1/15 | | | Exercisable | | | | |
| | | 1,131,539 | | | | | | | | | | | | | |
On June 11, 2013, 220,383 warrants with an exercise price of $20.16 issued in June 2008 expired. There were no warrants exercised during the year ended December 31, 2013. |
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