Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

7. Stock-Based Compensation

The Company recognized stock-based compensation expense on all employee and non-employee awards as follows:

	For the three months
	ended March 31,
(in thousands)	2017		2016
Research and development	$	560	$	417
General and administrative		1,464		1,592
Stock-based compensation expense	$	2,024	$	2,009

The Company granted 117,000 stock options during the three months ended March 31, 2017 with a weighted-average grant date fair value of $4.48 per share. The Company granted an aggregate of 20,000 stock options during the three months ended March 31, 2016 with a weighted-average grant date fair value of $3.88 per share.

For the three months ended March 31, 2017 and 2016, the fair value of stock options was estimated on the date of grant using a Black-Scholes option valuation model with the following assumptions:

	For the three months ended March 31,
	2017	2016
Risk-free interest rate	2.04 - 2.23%	1.58 - 1.90%
Expected life in years	6	6
Expected volatility	80.31 - 80.90%	79.15 - 79.69%
Expected dividend yield	0	0

The Company adopted ASU 2016-09 – Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting, effective January 1, 2017. The update revises requirements in the following areas: minimum statutory withholding, accounting for income taxes, and forfeitures. Prior to adoption, the Company recognized share-based compensation, net of estimated forfeitures, over the vesting period of the grant. Upon adoption of ASU 2016-09, the Company elected to change its accounting policy to recognize forfeitures as they occur. The new forfeiture policy election was adopted using a modified retrospective approach with a cumulative effect adjustment of $122 thousand recorded to accumulated deficit as of January 1, 2017.

Stock option activity under the Company’s stock option plan for the three months ended March 31, 2017 is as follows:

(in thousands, except share and per share data)	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, December 31, 2016		3,465,335		$	5.07
Granted		117,000			6.42
Exercised		(5,000	)		4.89
Cancelled		(37,666	)		6.25
Outstanding, March 31, 2017		3,539,669		$	5.10		6.55	$	6,295
Options exercisable, March 31, 2017		2,673,668		$	4.41		5.63	$	5,795
Options exercisable, December 31, 2016		2,671,835		$	4.40		5.88	$	3,383
Options available for future grant		1,698,426

At March 31, 2017, total unrecognized compensation costs related to unvested stock options outstanding amounted to $3.3 million. The cost is expected to be recognized over a weighted-average period of 1.48 years.

A summary of the status of unvested restricted stock for the three months ended March 31, 2017 is as follows:

	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested, December 31, 2016		1,680,492	$	7.49
Granted		—		—
Vested		—		—
Cancelled		—		—
Non-vested, March 31, 2017		1,680,492	$	7.49

At March 31, 2017, total unrecognized compensation costs related to unvested restricted stock outstanding amounted to $9.0 million. The cost is expected to be recognized over a weighted-average period of 1.44 years.