Stock-based Compensation

3 Months Ended

Mar. 31, 2017

8. Stock-based Compensation

In June 2015, upon obtaining stockholder approval at its annual shareholder meeting, the Company implemented its new 2015 Stock Plan. The 2015 Stock Plan replaced the 2006 Stock Plan which was terminated upon adoption of the 2015 Stock Plan. Shares of common stock reserved for outstanding awards under the 2006 Stock Plan that lapse or are canceled will be added back to the share reserve available for future awards under the 2015 Stock Plan. The 2015 Stock Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock and other stock-based compensation awards to employees, officers, directors and consultants of the Company. The administration of the 2015 Stock Plan is under the general supervision of the compensation committee of the board of directors. The exercise price of the stock options is determined by the compensation committee of the board of directors, provided that incentive stock options are granted with an exercise price not less than fair market value of the common stock on the date of grant and expire no later than ten years from the date the option is granted. As of March 31, 2017, the Company had options outstanding to purchase 925,011 shares of its common stock, which includes options outstanding under its 2006 Stock Plan that was terminated in June 2015. As of March 31, 2017, 510,261 shares were available for future issuance.

The following table summarizes stock option activity during the three months ended March 31, 2017:

	Shares	Weighted average exercise price
Outstanding at January 1, 2017	784,011	$	10.70
Options granted	141,000	15.80
Options exercised	—	—
Options cancelled	—	—

Outstanding at March 31, 2017	925,011	$	11.48

Exercisable at March 31, 2017	149,882	$	12.78

The total cash received by the Company as a result of stock option exercises was $0 in each of the three months ended March 31, 2017 and 2016. The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the three months ended March 31, 2017 was $12.69.

Restricted Common Stock

The Company’s share-based compensation plan provides for awards of restricted shares of common stock to employees, officers, directors and consultants to the Company. Restricted stock awards are subject to forfeiture if employment or service terminates during the prescribed retention period. Restricted shares vest over the service period. There were 157,262 unvested restricted shares outstanding at a weighted average grant date fair value of $10.06 at March 31, 2017 and December 31, 2016.

Stock-Based Compensation Expense

Stock-based compensation expense during the three months ended March 31, 2017 and 2016 was as follows (in thousands):

	Three Months Ended March 31,
	2017		2016
Stock-based compensation expense by type of award:
Stock options	$	454	$	—
Restricted stock	148		—

Total stock-based compensation expense	$	602	$	—


Effect of stock-based compensation expense by line item:
Research and development	$	138	$	—
General and administrative	464		—

Total stock-based compensation expense included in net loss	$	602	$	—

Unrecognized stock-based compensation expense as of March 31, 2017 was as follows (in thousands):

	Unrecognized stock compensation expense		Weighted average remaining period (in years)
Stock options	$	5,783	2.83
Restricted stock	1,210		2.21

Total	$	6,993	2.72