8. Stockholders’ Equity

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, 2019, 330,450 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, as amended (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, 2019, 7,121,331 options to purchase shares of common stock and 32,400 restricted shares of common stock were outstanding pursuant to grants in connection with the 2014 Plan, and 663,460 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, 2019, the shares of common stock available for future grants under the 2014 Plan was increased to 5,082,305.

In addition, during the years ended December 31, 2019 and 2018, we granted 920,000 and 311,000 options, respectively, to purchase shares of common stock outside of our 2014 Plan as inducement grants material to new employees entering into employment agreements with us pursuant to Nasdaq Listing Rule 5635(c)(4). The amount, terms of grants, and exercisability provisions of these grants are determined and set by our board of directors, and are largely consistent with the terms and exercisability provisions of grants under our 2014 Plan.

Stock Options

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



	Year Ended December 31,
	2019		2018
Research and development	$	2,563	$	1,712
General and administrative		3,070		2,995
Total	$	5,633	$	4,707

Options issued under both the 2005 Plan and 2014 Plan and the inducement grants 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, 2019 and 2018 is presented below (in thousand, except share and per share amounts):


		Weighted‑
		Average		Aggregate
		Exercise Price		Intrinsic
	Shares	Per Share		Value
Outstanding—December 31, 2017	3,754,320	$	5.22
Granted	1,372,000		6.60
Exercised	(12,308)		1.18
Forfeited	(162,603)		5.00
Outstanding—December 31, 2018	4,951,409		5.62
Granted	4,703,000		2.31
Exercised	(80,020)		1.22
Forfeited	(916,205)		4.21
Expired	(117,903)		8.23
Outstanding—December 31, 2019	8,540,281	$	3.95	$	3,774

Exercisable—December 31, 2019	4,431,560	$	5.04	$	1,447
Exercisable and expected to vest—December 31, 2019	8,540,281	$	3.95	$	3,774

The weighted average remaining contractual term of options outstanding and exercisable as of December 31, 2019 is 8.1 years and 7.1 years, respectively.

Intrinsic value in the table above was determined by calculating the difference between the market value of our common stock on the last trading day of 2019 of $2.16 per share and the exercise price, multiplied by the number of in-the-money options.

The weighted‑average grant date fair value of options granted was $1.90 and $5.51 per share in 2019 and 2018, respectively, and was estimated at the date of grant using the Black‑Scholes option‑pricing model with the following ranges of weighted‑average assumptions:


	2019				2018
Expected stock price volatility	104.7	-	118.87	%	106.64	-	113.19	%
Expected term of options	5.16	-	6.1	years	5.2	-	6.1	years
Risk‑free interest rate	1.51	-	2.59	%	2.32	-	3.1	%
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 volatility of our stock price.

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, 2019, there was $8.3 million of total unrecognized compensation expense related to unvested stock options. That expense is expected to be recognized over the next four years as follows, in thousands:


2020	$	3,981
2021		2,941
2022		1,065
2023		304
	$	8,291

Restricted Stock

All issued and outstanding restricted shares of common stock are time-based and become vested one year after the grant date, pursuant to the 2014 Plan. Compensation expense is recorded ratably over the requisite service period. Compensation expense related to restricted stock is measured based on the fair value using the closing market price of the Company’s common stock on the date of the grant.

No restricted shares of common stock were issued during 2019 or 2018. A summary of activity for the years ended December 31, 2019 and 2018 is presented below:


		Weighted‑average
		Grant Date
	Shares	Fair Value per Share
Outstanding—December 31, 2017	239,800	$	1.21
Vested	(120,600)		1.21
Forfeited	(14,000)		1.21
Outstanding—December 31, 2018	105,200		1.21
Vested	(52,600)		1.21
Forfeited	(20,200)		1.21
Outstanding—December 31, 2019	32,400	$	1.21

Expected to vest—December 31, 2019	32,400	$	1.21

As of December 31, 2019, there was no unrecognized compensation cost related to unvested restricted stock.

Total compensation cost recognized for all restricted stock awards in the statements of operations for the years ended December 31, 2019 and 2018 is as follows (in thousands):


	Year Ended
	December 31,
	2019		2018
Research and development	$	19	$	19
General and administrative		20		62
Total	$	39	$	81

Equity Distribution Agreement

In October 2017, we entered into an Equity Distribution Agreement (EDA) with JMP Securities LLC (JMP), under which JMP, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the agreement up to a maximum of $50 million of shares of our common stock

The EDA will terminate upon the earliest of: (1) the sale of all shares subject to the EDA, (2) October 31, 2020 or (3) the termination of the EDA in accordance with its terms. Either party may terminate the EDA at any time upon written notification to the other party in accordance with the EDA, and upon such notification, the offering will terminate.

We agreed to pay JMP a commission of up to 3.0% of the gross sales price of any shares sold pursuant to the EDA. With the exception of commissions related to sale of the shares, JMP will be responsible for all of its own costs and expenses incurred in connection with the offering.

During the year ended December 31, 2019, we issued 1,692,289 shares of our common stock pursuant to the EDA for aggregate net proceeds to us of $2.1 million. As of December 31, 2019, $34.8 million remained available under the EDA. We did not issue any shares pursuant to the EDA during the year ended December 31, 2018.

Public Offering

On December 11, 2019, the Company entered into an underwriting agreement with Oppenheimer & Co., Inc., as representative of the underwriters (the “Underwriting Agreement”), in connection with the underwritten public offering of 28,000,000 shares of the Company’s common stock, par value $0.001 per share, at a price to the public of $1.25 per share (the “Public Offering”). Pursuant to the terms of the Underwriting Agreement, on December 13, 2019, the Company sold 32,200,000 shares of common stock, including the exercise of the option granted to the underwriters for 4,200,000 shares of common stock, and received net proceeds of $37.4 million, after deducting underwriting discounts and commissions and other transaction costs of $2.8 million.