Stockholders' Equity (Deficit)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Stockholders' Equity (Deficit)

7. Stockholders’ Equity (Deficit)

Stock-Based Compensation Plans

The Company has had stock-based compensation plans since 1997. The awards made under the plans adopted in 1997 and 2007 consisted of stock options. The 2010 Equity Incentive Plan (the “2010 Plan”), which is the only plan under which awards may currently be made, authorizes awards in the form of stock options, stock appreciation rights, restricted stock, RSUs, PRSUs and performance units and performance shares. Awards under the 2010 Plan may be made to employees, directors and certain consultants as determined by the compensation committee of the board of directors. There were 11,003,563 and 11,850,563 shares of common stock authorized and reserved under these plans at December 31, 2016 and March 31, 2017, respectively.

Stock Options

Under the various plans, employees have been granted incentive stock options, while directors and consultants have been granted non-qualified options. The plans allow the holder of an option to purchase common stock at the exercise price, which was at or above the fair value of the Company’s common stock on the date of grant.

Generally, options granted under the 1997 and 2007 plans in connection with an employee’s commencement of employment vested over a four-year period with one-half of the shares subject to the grant vesting after two years of employment and remaining options vesting monthly over the remainder of the four-year period. Options granted under the 1997 and 2007 plans for performance or promotions vested monthly over a four-year period. Generally, options granted under the 2010 Plan vest annually over a three-year or four-year period. Unexercised stock options terminate on the tenth anniversary date after the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. The Company utilizes a Black-Scholes option-pricing model to estimate the value of stock options. The Black-Scholes model allows the use of a range of assumptions related to volatility, risk-free interest rate, employee exercise behavior and dividend yield. Expected volatilities used in the model beginning in 2015 were based on historical volatility of the Company’s stock prices.

The Company is using the “simplified” method for “plain vanilla” options to estimate the expected term of the stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. The risk-free interest rate assumption is derived from the weighted-average yield of a U.S. Treasury security with the same term as the expected life of the options, and the dividend yield assumption is based on historical experience and the Company’s estimate of future dividend yields.

The weighted-average value of the individual options granted during the three months ended March 31, 2016 and 2017 were determined using the following assumptions:

	Three Months Ended March 31,
	2016		2017
Expected volatility	99.37	%	93.02	%
Risk-free interest rate	1.46	%	2.12	%
Weighted-average expected life (in years)	6.3		6.3
Dividend yield	0.00	%	0.00	%

The Company’s stock option activity and related information are summarized as follows:

				Weighted-Average
				Remaining
		Weighted-Average		Contractual Term	Aggregate
	Options	Exercise Price		(In Years)	Intrinsic Value
Outstanding at January 1, 2017	6,447,594	$	6.41
Granted during period	653,842		2.17
Exercised during period	(7,757)		2.10
Expired during period	(163,836)		8.82
Forfeited during period	(68,875)		5.59
Outstanding at March 31, 2017	6,860,968	$	5.96	6.27	$	282,786
Exercisable at March 31, 2017	5,085,833	$	6.72	5.33	$	29,895

As of March 31, 2017, the total remaining unrecognized compensation cost related to stock options granted was $4.4 million, which is expected to be recognized over a weighted average period of approximately 1.6 years.

Restricted Stock Units

In May 2011, the Company adopted and granted awards under a performance-based RSU program (the “2011 PRSU Program”) under the 2010 Plan. All PRSU awards expired in the second quarter of 2016 when the performance deadline of May 26, 2016 passed.

RSUs are service-based awards that will vest and be paid in the form of one share of the Company’s common stock for each RSU, generally in three or four equal annual installments beginning on the first anniversary of the date of grant of an RSU. As of March 31, 2017, the Company had 616,912 RSU awards outstanding. As of March 31, 2017, the total remaining unrecognized compensation cost related to RSUs was $1.7 million, which is expected to be recognized over a weighted average period of approximately 1.8 years.

The following table sets forth the number of RSUs that were granted, vested and forfeited in the period indicated:

	Restricted	Weighted-Average
	Stock	Grant
	Units	Date Fair Value
Outstanding at January 1, 2017	394,132	$	4.96
Granted during period	367,985		2.17
Vested during period	(128,225)		5.77
Forfeited during period	(16,980)		3.50
Outstanding at March 31, 2017	616,912	$	3.17

Employee Stock Purchase Plan

At January 1, 2017,  825,154 common shares were available for issuance under the ESPP. Shares may be issued under the ESPP twice a year. There were no purchases in the three months ended March 31, 2017. At March 31, 2017, there were 825,154 common shares available for issuance under the ESPP.