SiliconBeat

The welcome wagon at AP Pharma rolled out a huge option award Monday to its new chief executive, Ronald Prentki.

How big was it?

So big that it ate up just over a third of all the shares in its supply for stock-based compensation at the end of last year, based on the company’s last annual financial filing. It was nearly 15 times the number of shares doled out to everyone in the company during all of 2007.

Even sweeter, the option has an exercise price of $1.19 per share, which was 67 percent lower than the average exercise price of all the options AP Pharma granted last year and 86 percent lower than the average exercise price of all options outstanding as of Dec. 31; below even the $1.30 that was the lowest priced option in existence at the end of last year.

Shares of AP Pharma, a 25-year old biopharmaceutical company that develops drugs using its own novel controlled-release delivery system, have fallen 25 percent so far this year, and hit an all-time low of 81 cents in mid-April. They closed today at $1.18

There is potential for major movement in the stock depending on the results of a pivotal clinical trial of its lead drug candidate designed to prevent chemotherapy-induced nausea and vomiting in cancer patients. The company expects to announce trial results this quarter and to file new a new drug application with the Food and Drug Administration in the fourth quarter of 2008, according to the company’s annual financial filing with the SEC.

The option grant doesn’t begin to vest for a year. In the meantime, Prentki will have to make do with his $425,000 annually salary and bonus targeted at half that amount.