Quarterly report pursuant to Section 13 or 15(d)

Stock Based Compensation

v3.10.0.1
Stock Based Compensation
6 Months Ended
Jun. 30, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Based Compensation

NOTE 11 — STOCK-BASED COMPENSATION

The Company recognizes stock-based compensation in accordance with ASC 718, “Compensation—Stock Compensation.” Stock-based compensation expense, which consists of the compensation cost for employee stock options granted under the 2009 Stock Plan, as amended (the “2009 Stock Plan”), the Company’s 2014 Equity Incentive Plan, as amended (the “2014 Equity Incentive Plan”), the Company’s 2018 Equity Incentive Plan (the “2018 Equity Incentive Plan”) and the value of options issued to non-employees for services rendered, was allocated to research and development and general and administrative expenses in the unaudited consolidated statements of operations. Stock-based compensation for the three and six months ended June 30, 2018 and 2017 were (in thousands):

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Research and development

$

316

 

 

$

 

 

$

496

 

 

$

 

General and administrative

 

606

 

 

 

25

 

 

 

1,069

 

 

 

52

 

Total stock-based compensation

$

922

 

 

$

25

 

 

$

1,565

 

 

$

52

 

 

Valuation Assumptions

The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula and a single option award approach. This fair value is being amortized ratably over the requisite service periods of the awards, which is generally the vesting period. The fair value of employee stock options was estimated using the following weighted-average assumptions for the three and six months ended June 30, 2018 and 2017:

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

2018

 

 

2017 (1)

 

 

2018

 

 

2017

 

Employee Stock Options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk-free interest rate

 

2.81

%

 

 

 

 

 

2.79

%

 

 

1.95

%

Expected term (in years)

 

6.03

 

 

 

 

 

 

6.03

 

 

 

5.00

 

Dividend yield

 

 

 

 

 

 

 

 

 

 

 

Volatility

 

107

%

 

 

 

 

 

107

%

 

 

76

%

Weighted-average fair value of stock options granted

$

5.20

 

 

$

 

 

 

5.83

 

 

$

0.82

 

 

(1)

There were no stock options granted during the three months ended June 30, 2017.

 

To determine the expected term of the Company’s employee stock options granted, the Company utilized the simplified approach as defined by SEC Staff Accounting Bulletin No. 107, “Share-Based Payment” (“SAB 107”). To determine the risk-free interest rate, the Company utilized an average interest rate based on U.S. Treasury instruments with a term consistent with the expected term of the Company’s stock-based awards. To determine the expected stock price volatility for the Company’s stock-based awards, the Company utilized the historical volatility of the Company’s common stock. The fair value of all the Company’s stock-based awards assumes no dividends as the Company does not anticipate paying cash dividends on its common stock.

Employee Stock-based Compensation Expense

As required by ASC 718, the Company recognized $922,000 and $1.6 million of stock-based compensation expense related to stock options under the Company’s equity incentive plans for the three and six months ended June 30, 2018, respectively, and $25,000 and $52,000 for the three and six months ended June 30, 2017, respectively.  

As of June 30, 2018, the total unrecognized compensation cost related to unvested stock-based awards granted to employees under the Company’s equity incentive plans was approximately $16.0 million. This cost will be recorded as compensation expense on a ratable basis over the remaining weighted average requisite service period of approximately 3.4 years.

Equity Incentive Plans

The Company’s equity incentive plans include the 2009 Stock Plan, the 2014 Equity Incentive Plan and the 2018 Equity Incentive Plan. No additional shares will be issued under the 2009 Stock Plan and the 2014 Equity Incentive Plan.

The following table summarizes stock option activity under the Company’s equity incentive plans:

 

Options

 

Number of

Shares

 

 

Weighted-

Average

Exercise

Price

 

 

Weighted-

Average

Remaining

Contractual

Term

 

 

Aggregate

Intrinsic

Value (in millions)

 

Outstanding at December 31, 2017

 

 

2,768,711

 

 

$

12.07

 

 

 

5.6

 

 

$

11.0

 

Granted

 

 

1,772,037

 

 

$

7.06

 

 

 

 

 

 

 

Exercised

 

 

(166,868

)

 

$

0.93

 

 

 

 

 

 

 

Forfeitures

 

 

(26,732

)

 

$

30.07

 

 

 

 

 

 

 

Outstanding at June 30, 2018

 

 

4,347,148

 

 

$

10.34

 

 

 

7.3

 

 

$

3.2

 

Exercisable at June 30, 2018

 

 

1,496,349

 

 

$

15.78

 

 

 

2.8

 

 

$

3.2

 

 

The total intrinsic value of stock options exercised during the three and six months ended June 30, 2018, was $30,000 and $1.6 million, respectively, as determined at the date of the option exercise. Cash received from stock option exercises was $8,000 and $156,000 for the three and six months ended June 30, 2018, respectively.  No stock options were exercised during the three and six months ended June 30, 2017.  The Company issues new shares of common stock upon exercise of options. In connection with these exercises, there was no tax benefit realized by the Company due to the Company’s current loss position.