Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
 3 Months Ended
Mar. 31, 2012
Stockholders' Equity [Abstract]  
Stockholders' Equity

NOTE 4 — STOCKHOLDERS' EQUITY

Common Stock

Pursuant to an amendment to the at the market issuance sales agreement and a prospectus supplement the Company filed on January 20, 2012 and pursuant to a new registration statement filed with the Securities and Exchange Commission, the Company may sell shares of its common stock having an aggregate offering price of up to $15.0 million from time to time through MLV & Co., LLC, formerly McNicoll, Lewis & Vlak LLC as its sales agent. During the three months ended March 31, 2012, the Company sold 2,022,144 shares of our common stock at an average price of $6.29 pursuant to the at market issuance sales agreement. Net proceeds from the sale of stock were $12.3 million. The sale of stock did not result in an adjustment to the exercise price of certain of our outstanding warrants.

Common Stock Warrants

The Company accounts for its common stock warrants under guidance now codified in ASC 815 that clarifies the determination of whether an instrument (or an embedded feature) is indexed to an entity's own stock, which would qualify for classification as liabilities. The guidance required the Company's outstanding warrants to be classified as liabilities and to be fair valued at each reporting period, with the changes in fair value recognized as other income (expense) in the Company's consolidated statement of comprehensive loss.

During the three months ended March 31, 2012, warrants to purchase 2,995,196 shares of common stock were exercised for net proceeds of approximately $4.6 million. Upon the exercise of the warrants, the Company transferred the fair value of the warrants of approximately $16.0 million from warrant liability into stockholders' equity.

At March 31, 2012 and December 31, 2011, the Company had warrants outstanding to purchase 3,529,398 and 3,588,221 shares of common stock, respectively, from the August 2008 offering. The fair value of these warrants on March 31, 2012 and December 31, 2011 was determined using a Black-Scholes valuation model with the following level 3 inputs:

 

     March 31,
2012		     December 31,
2011		  

Risk-free interest rate

      0.33 %     0.25 %

Expected life (in years)

      1.41        1.66   

Dividend yield

      —          —     

Volatility

      117 %     84 %

Stock price

    $ 8.80      $ 1.22   

During the three months ended March 31, 2012, the change in fair value of $24.7 million related to the August 2008 warrants was recorded as other expense in the Company's consolidated statement of comprehensive loss.

At March 31, 2012 and December 31 2011, the Company had warrants outstanding to purchase 4,821,969 and 7,329,819 shares of common stock, respectively from the October 2009 offering. The fair value of these warrants on March 31, 2012 and December 31, 2011 was determined using a Black Scholes valuation model with the following level 3 inputs:

 

     March 31,
2012		     December 31,
2011		  

Risk-free interest rate

      0.51 %     0.36 %

Expected life (in years)

      2.52        2.76   

Dividend yield

      —          —     

Volatility

      103 %     88 %

Stock price

    $ 8.80      $ 1.22   

During the three months March 31, 2012 the change in fair value of $44.5 million related to the October 2009 warrants was recorded as other expense in the Company's consolidated statement of comprehensive loss.

 

At March 31, 2012 and December 31, 2011, the Company had warrants outstanding to purchase 5,296,704 and 5,725,227 shares of common stock, respectively from the March 2011 offering. The fair value of these warrants on March 31, 2012 and December 31, 2011was determined using a Black Scholes valuation model with the following level 3 inputs:

 

     March 31,
2012		     December 31,
2011		  

Risk-free interest rate

      1.04 %     0.60 %

Expected life (in years)

      3.96        4.21   

Dividend yield

      —          —     

Volatility

      110 %     102 %

Stock price

    $ 8.80      $ 1.22   

During the three months ended March 31, 2012, the change in fair value of $39.2 million related to the March 2011 warrants was recorded as other expense in the Company's consolidated statement of comprehensive loss.

The following table sets forth the Company's financial liabilities, related to warrants issued in the August 2008, October 2009 and March 2011offerings, subject to fair value measurements as of March 31, 2012:

 

     Fair Value as of
March 31,
2012 		     Basis of Fair Value Measurements  
(in thousands)           Level 1      Level 2      Level 3  

Common stock warrants

    $ 101,625       $ —         $ —         $ 101,625   

The following table is a reconciliation of the warrant liability measured at fair value using level 3 inputs (in thousands):

 

     Warrant Liability  

Balance at December 31, 2011

    $ 9,209   

Change in fair value of common stock warrants during three months ended March 31, 2012

      108,391   

Exercise of warrants during three months ended March 31, 2012

      (15,975 ) 
  

 

 

  

Balance at March 31, 2012

    $ 101,625