7. Stock Option and Incentive Plans

In 2005, we adopted the 2005 Stock Option and Incentive Plan (2005 Plan) that authorizes us to grant options, restricted stock and other equity-based awards. As of December 31, 2015, 549,287 options to purchase shares of common stock were outstanding pursuant to grants in connection with the 2005 Plan. No additional shares are available for issuance under the 2005 Plan. The amount, terms of grants, and exercisability provisions are determined and set by our board of directors.

Effective August 2014, we adopted our 2014 Equity Incentive Plan (2014 Plan) that authorizes us to grant options, restricted stock, and other equity-based awards, subject to adjustment in accordance with the 2014 Plan. As of December 31, 2015, 1,249,939 options to purchase shares of common stock were outstanding pursuant to grants in connection with the 2014 Plan, and 4,371 shares of common stock were available for future issuance. The amount, terms of grants, and exercisability provisions are determined and set by our board of directors. In accordance with the 2014 Plan, on January 1, 2016, 775,634 shares of common stock became available for future grant under the plan.

There were 1,799,226 stock options outstanding as of December 31, 2015 at a weighted average exercise price of $7.74 per share.

Total compensation cost recognized for all stock option awards in the statements of operations is as follows (in thousands):


	Year Ended
	December 31,
	2015		2014
Research and development	$	685	$	137
General and administrative		1,423		561
Total stock-based compensation expense	$	2,108	$	698

Stock Options

Options issued under both the 2005 Plan and 2014 Plan may have a contractual life of up to 10 years and may be exercisable in cash or as otherwise determined by the board of directors. Vesting generally occurs over a period of not greater than four years. A summary of activity for the years ended December 31, 2015 and 2014 is presented below (in thousands, except share and per share amounts):


		Weighted‑
		Average		Aggregate
		Exercise Price		Intrinsic
	Shares	Per Share		Value
Outstanding—December 31, 2013	1,093,208	$	1.04
Granted	700,000		8.99
Exercised	(122,634)		1.04
Outstanding—December 31, 2014	1,670,574		4.37
Granted	585,800		12.56
Exercised	(327,098)		1.14
Forfeited	(44,950)		6.13
Expired	(85,100)		1.04
Outstanding—December 31, 2015	1,799,226	$	7.74	$	3,786

Exercisable—December 31, 2015	785,174	$	5.05	$	2,834
Exercisable and expected to vest—December 31, 2015	1,799,226	$	7.74	$	3,786

The weighted average remaining contractual term of options outstanding and exercisable as of December 31, 2015 is 8.5 and 7.7 years, respectively.

The aggregate intrinsic values in the preceding table represent the total intrinsic value that would have been received had all option holders exercised their options on December 31, 2015. Intrinsic value is determined by calculating the difference between the fair value of our common stock on the last day of the year and the exercise price, multiplied by the number of options.

The weighted‑average grant date fair value of options granted was $8.15 and $6.09 per share in 2015 and 2014, respectively, and was estimated at the date of grant using the Black‑Scholes option‑pricing model with the following weighted‑average assumptions:


	2015				2014
Expected stock price volatility	73.64	-	81.21	%	77.66	-	86.08	%
Expected term of options	5.2	-	6.1	years	5.5	-	6.06	years
Risk‑free interest rate	1.44	-	1.92	%	1.75	-	1.98	%
Expected annual dividend yield			0	%			0	%

The weighted‑average valuation assumptions were determined as follows:

Expected stock price volatility: The expected volatility is based on historical volatilities of similar entities within our industry which were commensurate with our expected term assumption as described in the SEC’s Staff Accounting Bulletin, or SAB, No. 107.

Expected term of options: We estimated the expected term of our stock options with service‑based vesting using the “simplified” method, as prescribed in SAB No. 107, whereby the expected life equals the average of the vesting tranches and the original contractual term of the option due to our lack of sufficient historical data.

Risk‑free interest rate: We base the risk‑free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term.

Expected annual dividend yield: The estimated annual dividend yield is 0% because we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our common stock.

As of December 31, 2015, there was $6.6 million of total unrecognized compensation expense related to unvested stock options granted under the 2005 Plan and 2014 Plan. That expense is expected to be recognized in the years ended as follows, in thousands:


2016	$	2,863
2017		2,256
2018		1,293
2019		146
	$	6,558