Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
 6 Months Ended
Jun. 30, 2011
Stockholders' Equity [Abstract]  
Stockholders' Equity

8. Stockholders' Equity

On November 8, 2010, following approval from the Company's stockholders at a special meeting of stockholders on September 9, 2010, the Company announced a 1-for-6 reverse stock split of its common stock. Accordingly, all share, warrant, option and per share information for all periods presented has been restated to account for the effect of the reverse stock split.

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, 2010

      641,261      $ 21.36         

Granted

      633,330        9.96         

Exercised

      (3,312 )      9.98         

Forfeited

      (18,873 )      15.52         

Cancelled

      (70,859 )      31.73         
  

 

 

          

Balance at June 30, 2011

      1,181,547      $ 14.73         8.59       $ 1,629   
  

 

 

          

Exercisable at June 30, 2011

      362,148      $ 23.87         6.87       $ 155   

Options expected to vest as of June 30, 2011

      1,036,721      $ 15.23         8.51       $ 1,383   

 

The weighted-average grant-date fair value of all stock options granted during the six months ended June 30, 2011 was $6.31 per share. The total intrinsic value of all options exercised during the six months ended June 30, 2011 was approximately $2,500. There were no options exercised during the six months ended June 30, 2010. As of June 30, 2011, there was $5.1 million of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over a weighted-average period of 2.5 years.

As of June 30, 2011, 0.7 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 six months ended June 30, 2011 is as follows:

 

     Shares     Weighted-
Average Grant
Date Stock
Price 		 

Nonvested at December 31, 2010

      62,146      $ 13.60   

Granted

      119,126        10.05   

Vested

      (59,141 )      12.51   

Forfeited

      (3,271 )      13.15   
  

 

 

    

Nonvested at June 30, 2011

      118,860      $ 10.60   
  

 

 

    

The weighted-average grant-date fair value of restricted stock granted during the six months ended June 30, 2011 was $10.05 per share. As of June 30, 2011, there was $1.0 million of total unrecognized compensation cost related to nonvested restricted stock. That cost is expected to be recognized over a weighted-average period of 2.0 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 2,404 and 81,844 shares of common stock issued and $18,000 and $0.1 million of proceeds received under the Amended ESPP during the six months ended June 30, 2011 and 2010, respectively. The Company recorded compensation expense of $700 and $44,000 for the six months ended June 30, 2011 and 2010, respectively. As of June 30, 2011, 102,498 shares were available for future purchases under the Amended ESPP.

Warrants

As of June 30, 2011, warrants to purchase 144,606 shares of the Company's common stock were outstanding with an exercise price of $51.54 per share and an expiration date of April 2012. The warrants were assumed in the acquisition of Pharmacopeia, Inc.

As of June 30, 2011, 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.

 

Share Repurchases

On June 15, 2010, the Company announced that its Board of Directors has authorized the Company to repurchase up to $10.0 million of its common stock from time to time in privately negotiated and open market transactions for a period of up to two years, subject to the Company's evaluation of market conditions, applicable legal requirements and other factors. The Company is not obligated to acquire common stock under this program and the program may be suspended at any time. Through June 30, 2011, the Company repurchased 16,905 shares of its common stock totaling $0.1 million.