Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Summary of Significant Accounting Policies

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash equivalents. The Company invests its excess cash principally in a 100% U.S. Treasury Money Market Fund and the remaining balances in a major U.S. bank, and its deposits, at times, exceed federally insured limits. The Company has not experienced any losses from credit risks.

Stock-Based Compensation

Stock-Based Compensation

The Company follows the provisions of the ASC Topic 718, Compensation — Stock Compensation which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and non-employee directors, including employee stock options. Stock compensation expense based on the grant date fair value estimated in accordance with the provisions of ASC 718 is generally recognized as an expense over the requisite service period.

The Company elected to recognize compensation cost using the straight-line attribution method for all service-based stock options.  For performance-based stock options share based compensation expense is recorded using the accelerated attribution method.

For stock options granted as consideration for services rendered by non-employees, the Company recognizes expense in accordance with the requirements of ASC Topic 505-50, Equity Based Payments to Non-Employees. Non-employee option grants that do not vest immediately upon grant are recorded as an expense over the vesting period of the underlying stock options. At the end of each financial reporting period prior to vesting, the value of these options, as calculated using the Black-Scholes option-pricing model, will be re-measured using the fair value of the Company’s common stock and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair market value of options granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurements until the stock options are fully vested.

Prior to becoming a public company, the board of directors has determined the estimated fair value of the Company’s common stock based on a number of objective and subjective factors, including external market conditions affecting the biotechnology industry sector and the prices at which the Company sold shares of its common stock.

Due to the lack of trading history, the Company’s computation of stock-price volatility is based on the volatility rates of comparable publicly held companies over a period equal to the estimated useful life of the options granted by the Company. The Company’s computation of expected life was determined using the “simplified” method which is the midpoint between the vesting date and the end of the contractual term. The Company believes that it does not have sufficient reliable exercise data in order to justify the use of a method other than the “simplified” method of estimating the expected exercise term of employee stock option grants. The Company has paid no dividends to stockholders. The risk-free interest rate is based on the zero-coupon U.S. Treasury yield at the date of grant for a term equivalent to the expected term of the option.

Stock-based compensation expense includes stock options granted to employees and non-employees and has been reported in the Company’s statements of operations as follows:

	Three months Ended June 30,				Six months Ended June 30,
	2013		2012		2013		2012
Research and development	$	422,719	$	67,017	$	1,787,127	$	91,251
General and administrative	154,099		31,726		1,074,872		40,776
Total	$	576,818	$	98,743	$	2,861,999	$	132,027

The Company had 34,507 shares of restricted common stock granted to employees at December 31, 2012 and 266,121shares of restricted common stock granted to employees at June 30, 2013. Of these shares, there were 34,507 and 248,869 unvested shares of restricted common stock at December 31, 2012 and June 30, 2013, respectively.