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v2.4.0.6
Equity Incentive Plans
12 Months Ended
Dec. 31, 2011
Equity Incentive Plans [Abstract]  
Equity Incentive Plans
9.

Equity Incentive Plans

The Company has two equity incentive plans (the “Current Plans”) under which the Company currently grants stock options, restricted stock awards and restricted stock units: the 2011 Stock Plan and the 2008 Outside Directors’ Stock Plan. In May 2011, the Company’s stockholders approved the Company’s 2011 Stock Plan, which provides for the granting of up to a total of 6,000,000 shares of common stock (subject to certain limitations as described in the 2011 Stock Plan) to selected employees, consultants and non-employee members of the Company’s Board of Directors ("Outside Directors") as stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and performance awards. The 2011 Stock Plan replaced the Company’s prior stock plans, consisting of the Company’s 2008 Stock Plan, 2006 Stock Plan and 2004 Stock Plan (“Prior Plans”, collectively with the Current Plans, the “Plans”). The Prior Plans were terminated such that no additional awards could be granted under the Prior Plans, but the terms of the Prior Plans remain in effect with respect to outstanding awards until they are exercised, settled or canceled. The Plans were approved by the stockholders. Awards are subject to terms and conditions established by the Compensation Committee of the Company’s Board of Directors.

During the year ended December 31, 2011, the Company granted share-based awards under the 2011 Stock Plan, the 2008 Stock Plan and the 2008 Outside Directors’ Stock Plan. At December 31, 2011, the Company had an aggregate of approximately 21,457,644 shares of common stock reserved for issuance. Of those shares, 6,017,784 shares were subject to outstanding awards, and 4,882,017 shares were available for future grants of share-based awards. At the present time, management intends to issue new common shares upon the exercise of stock options, issuance of restricted stock awards and settlement of restricted stock units.

Stock Options.    Options granted under each of the Plans must have an exercise price equal to at least 100% of the fair market value of the Company’s common stock on the date of grant. The options will generally have a maximum contractual term of ten years and vest at the rate of one-fourth of the shares on the first anniversary of the date of grant and 1/48 of the shares monthly thereafter. Certain option awards provide for accelerated vesting if there is a change in control (as defined in the Plans).

 

A summary of the Company’s stock option award activity as of and for the years ended December 31, 2011, 2010 and 2009 is as follows:

 

                                 
    Shares
Underlying
Stock Options
    Weighted
Average Exercise
Price per Share
    Weighted
Average Remaining
Contractual Term (yrs)
    Aggregate
Intrinsic
Value
 

Outstanding at January 1, 2009

    7,254,785     $ 3.02                  

Granted

    1,519,405     $ 6.41                  

Exercised

    (717,322   $ 1.42                  

Cancelled/forfeited

    (252,602   $ 6.11                  
   

 

 

                         

Outstanding at December 31, 2009

    7,804,266     $ 3.73                  

Granted

    1,332,714     $ 5.94                  

Exercised

    (479,093   $ 3.88                  

Cancelled/forfeited

    (682,522   $ 6.29                  
   

 

 

                         

Outstanding at December 31, 2010

    7,975,365     $ 3.87                  

Granted

    1,624,768     $ 7.79                  

Exercised

    (3,137,056   $ 1.71                  

Cancelled/forfeited

    (593,293   $ 6.72                  
   

 

 

                         

Outstanding at December 31, 2011

    5,869,784     $ 5.82       6.5     $ 21.7 million  
   

 

 

   

 

 

   

 

 

   

 

 

 

Vested and expected to vest at December 31, 2011

    5,538,478     $ 5.72       6.4     $ 21.1 million  
   

 

 

   

 

 

   

 

 

   

 

 

 

Exercisable at December 31, 2011

    3,372,552     $ 4.78       5.1     $ 16.1 million  
   

 

 

   

 

 

   

 

 

   

 

 

 

The weighted average grant-date fair values of options granted during the years ended December 31, 2011, 2010 and 2009 were $4.57 per share, $3.69 per share and $3.72 per share, respectively. As of December 31, 2011, approximately $8.5 million of total unrecognized compensation costs related to non-vested stock option awards was expected to be recognized over a weighted average period of approximately 2.8 years. The intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was approximately $16.6 million, $1.8 million and $3.9 million, respectively. Cash received from stock option exercises for the years ended December 31, 2011, 2010 and 2009 was approximately $4.7 million, $1.9 million and $1.0 million, respectively.

The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model (“Black-Scholes model”) that uses the assumptions noted in the following table. Expected volatility is based on historical volatility of the Company’s common stock. However, due to insufficient data of the Company’s common stock prior to 2010, expected volatility for the year ended December 31, 2009 was based on the Company’s common stock and its peer group. The expected term of options granted is based on analyses of historical employee termination rates and option exercises. 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. The dividend yield assumption is based on the expectation of no future dividend payments by the Company. Assumptions used in the Black-Scholes model were as follows:

 

                         
    Year Ended December 31,  
    2011     2010     2009  

Expected volatility

    64.0-65.1     65.8-70.8     65.0

Average expected term (in years)

    5.8       5.7       5.5  

Risk-free interest rate

    1.14-2.55     1.39-2.80     1.65-2.73

Expected dividend yield

    0     0     0

Restricted Stock Awards.    Restricted stock awards are grants that entitle the holder to acquire shares of the Company’s common stock at zero or a fixed price, which is typically nominal. The shares covered by a restricted stock award cannot be sold, pledged, or otherwise disposed of until the award vests and any unvested shares may be reacquired by the Company for the original purchase price following the awardee’s termination of service. Annual grants of restricted stock awards under the Outside Directors’ Stock Plans typically vest in full the first day the awardee may trade the Company’s stock in compliance with the Company’s insider trading policy following the date immediately preceding the first annual meeting of stockholders following the grant date.

During the year ended December 31, 2011, the Company granted certain employees 233,508 restricted stock awards at no purchase price, with a grant-date fair value of $6.67 per share, under the 2011 Stock Plan. These restricted stock awards are subject to percentage vesting based upon achievement of certain corporate goals and the employee’s continuing services through May 2012.

The following table summarizes the Company’s restricted stock award activity during the years ended December 31, 2011, 2010 and 2009:

 

                 
    Number of
Shares
    Weighted Average
Grant Date
Fair Value
 

Unvested at January 1, 2009

    192,500     $ 4.94  

Granted

    120,000     $ 5.81  

Vested

    (192,500   $ 4.94  

Forfeited

        $  
   

 

 

         

Unvested at December 31, 2009

    120,000     $ 5.81  

Granted

    120,000     $ 7.67  

Vested

    (120,000   $ 5.81  

Forfeited

        $  
   

 

 

         

Unvested at December 31, 2010

    120,000     $ 7.67  

Granted

    353,508     $ 6.51  

Vested

    (120,000   $ 7.67  

Forfeited

    (5,625   $ 6.67  
   

 

 

         

Unvested at December 31, 2011

    347,883     $ 6.51  
   

 

 

         

The fair value of the restricted stock awards is based on the market value of the Company’s common stock on the date of grant. The total grant-date fair value of restricted stock awards vested during the years ended December 31, 2011, 2010 and 2009 was approximately $920,000, $697,000 and $951,000, respectively. The Company recognized approximately $1.7 million, $844,000 and $878,000 of share-based compensation expense related to the restricted stock awards for the years ended December 31, 2011, 2010 and 2009. As of December 31, 2011, total unrecognized compensation cost related to unvested shares was approximately $777,000, which is expected to be recognized over a weighted-average period of approximately 4 months.

 

Restricted Stock Units.    A restricted stock unit is a promise by the Company to issue a share of Company common stock upon vesting of the unit. During the year ended December 31, 2011, the Company granted 163,000 shares of restricted stock units, at no purchase price, to certain employees under the 2011 Stock Plan. 148,000 shares of these restricted stock units are subject to percentage vesting based upon achievement of certain corporate goals and the employees’ continuing services through May 2012. No restricted stock units were granted during the years ended December 31, 2010 and 2009.

The following table summarizes the Company’s restricted stock unit activity during the year ended December 31, 2011:

 

                                 
    Number of
Shares
    Weighted
Average
Purchase Price
    Weighted
Average Remaining
Contractual Term (yrs)
    Aggregate
Intrinsic
Value
 

Unvested at January 1, 2011

        $  —                  

Granted

    163,000     $                  

Exercised

    (15,000   $                  

Forfeited

                             
   

 

 

                         

Unvested at December 31, 2011

    148,000     $       0.37     $ 1.4 million  
   

 

 

   

 

 

   

 

 

   

 

 

 

Vested and expected to vest at December 31, 2011

    142,346     $       0.37     $ 1.4 million  
   

 

 

   

 

 

   

 

 

   

 

 

 

Exercisable at December 31, 2011

        $           $  
   

 

 

   

 

 

   

 

 

   

 

 

 

The estimated fair value of the restricted stock units was based on the market value of the Company’s common stock on the date of grant. The weighted average grant-date fair value of restricted stock units granted during the year ended December 31, 2011 was $6.71 per share. The total grant-date fair value of restricted stock units vested during the year ended December 31, 2011 was approximately $107,000. The Company recognized approximately $663,000 of share-based compensation expense related to the restricted stock units for the year ended December 31, 2011. As of December 31, 2011, total unrecognized estimated unamortized compensation cost related to non-vested restricted stock units outstanding as of that date was approximately $325,000, with a weighted average amortization period of approximately 4 months.