Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
9 Months Ended
Sep. 30, 2012
Equity [Abstract]  
Stockholders' Equity
Stockholders’ Equity

On May 31, 2012, the Company’s stockholders approved the amendment and restatement of the Company’s 2002 Stock Incentive Plan to increase the number of shares available for issuance by 1.8 million shares.

Stock Option Activity

The following is a summary of the Company’s stock option plan activity and related information:

 
Shares
 
Weighted
Average
Exercise
Price
 
Weighted Average
Remaining
Contractual Term in
Years
 
Aggregate
Intrinsic Value
(In thousands)
Balance at December 31, 2011
1,146,046

 
$
14.61

 
7.96
 
$
1,489

Granted
710,345

 
14.73

 
 
 
 
Exercised
(46,799
)
 
9.96

 
 
 
 
Forfeited
(83,374
)
 
10.69

 
 
 
 
Cancelled
(13,481
)
 
39.73

 
 
 
 
Balance at September 30, 2012
1,712,737

 
14.84

 
 
 
 
Exercisable at September 30, 2012
781,738

 
16.58

 
7.10
 
2,983

Options vested and expected to vest as of September 30, 2012
1,712,737

 
14.77

 
8.1
 
6,729



The weighted-average grant date fair value of all stock options granted during the nine months ended September 30, 2012 was $14.73 per share. The total intrinsic value of all options exercised during the nine months ended September 30, 2012 and 2011 was approximately $0.3 million and $4,000, respectively. As of September 30, 2012, there was $6.6 million of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over a weighted-average period of 2.8 years.

As of September 30, 2012, 1.8 million shares were available for future option grants or direct issuance under the Company’s 2002 Stock Incentive Plan, as amended.

Restricted Stock Activity

Restricted stock activity for the nine months ended September 30, 2012 is as follows:

 
Shares
 
Weighted-
Average Grant
Date Fair Value
Nonvested at December 31, 2011
115,506

 
$
10.63

Granted
108,661

 
13.75

Vested
(71,825
)
 
11.48

Forfeited
(4,012
)
 
10.57

Nonvested at September 30, 2012
148,330

 
$
12.51



The weighted-average grant-date fair value of restricted stock granted during the nine months ended September 30, 2012 was $13.75 per share. As of September 30, 2012, there was $1.2 million of total unrecognized compensation cost related to nonvested restricted stock. That cost is expected to be recognized over a weighted-average period of 1.7 years.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan, as amended and restated (the “Amended ESPP”) allows participants to purchase up to 1,250 shares of Ligand common stock during each offering period, but in no event may a participant purchase more than 1,250 shares of common stock during any calendar year. The length of each offering period is six months, and employees are eligible to participate in the first offering period beginning after their hire date.

The Amended ESPP allows employees to purchase Ligand common stock at the end of each six month period at a price equal to 85% of the lesser of fair market value on either the start date of the period or the last trading day of the period (the “Lookback Provision”). The 15% discount and the Lookback Provision make the Amended ESPP compensatory.  There were 7,374 and 2,404 shares of common stock issued and $75,000 and $18,000 of proceeds received under the Amended ESPP during the nine months ended September 30, 2012 and 2011, respectively. The Company recorded compensation expense related to the ESPP of $29,000 and $700 for the nine months ended September 30, 2012 and 2011, respectively. As of September 30, 2012, 89,917 shares were available for future purchases under the Amended ESPP.

Warrants

As of September 30, 2012, 163,568 warrants with an exercise price of $179.40 per warrant and an expiration date of April 2013 were outstanding to purchase an aggregate of 129,360 shares of the Company’s common stock. If exercised, these warrants are also entitled to receive $0.1 million in cash and 981,411 of each of the Company's four contingent value rights issued to Neurogen shareholders in December 2009.  The series of warrants was assumed in the acquisition of Neurogen Corporation.

Public Offering

During the quarter ended September 30, 2012, the Company issued, pursuant to an at-the-market registered public offering, 150,000 common shares at a weighted average price of $18.19 per share. Total net proceeds to the Company after underwriting discounts and expenses were approximately $2.6 million.