Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders' Equity

Stockholders' Equity

7. 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 June 30, 2020, 172,276 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.

In August 2014, we adopted our 2014 Equity Incentive Plan, most recently amended in May 2020 (2014 Plan), that authorizes us to grant options, restricted stock, and other equity-based awards, subject to adjustment in accordance with the 2014 Plan. The amount, terms of grants, and exercisability provisions are determined and set by our board of directors. As of June 30, 2020, 11,037,264 options to purchase shares of common stock were outstanding pursuant to grants in connection with the 2014 Plan, and 927,314 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.

Stock Options

There were 12,899,540 stock options outstanding as of June 30, 2020 at a weighted-average exercise price of $3.21 per share. During the six months ended June 30, 2020, 5,552,700 options were granted to employees and directors at a weighted-average exercise price of $2.06 per share. Of the options granted, 4,918,700 options were granted pursuant to the 2014 Plan and 634,000 were granted outside of the 2014 Plan as inducements for new employees.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Research and development	$	678	$	611	$	1,407	$	1,260
General and administrative		1,114		642		2,260		1,819
Total	$	1,792	$	1,253	$	3,667	$	3,079

Restricted Stock

All issued and outstanding restricted shares of common stock are time-based, and become vested between one and three years after the grant date. 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 our common stock on the date of the grant.

We issued 21,000 and 0 restricted shares of common stock during the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 there were 21,000 restricted shares of common stock outstanding, and 32,400 shares vested during the six months ended June 30, 2020.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Research and development	$	—	$	5	$	—	$	10
General and administrative		4		5		5		10
Total	$	4	$	10	$	5	$	20

Preferred Stock

During the three months ended June 30, 2020, 20,697 shares of our Series A Convertible Preferred Stock (Preferred Stock) converted into 16,557,600 shares of our common stock, pursuant to the terms of the underlying securities purchase agreements. As of June 30, 2020, 9,303 shares of our Preferred Stock remain outstanding, convertible into 7,442,400 shares of our common stock. In May 2020, a registration statement covering the resale of shares of our common stock underlying our Preferred Stock. In accordance with the securities purchase agreements underlying the Preferred Stock, the liquidation preference was terminated, and we reclassified the Preferred Stock into permanent equity as of June 30, 2020.

Deemed Dividends

On March 31, 2020, our stockholders approved an amendment to our company charter with the Secretary of State of the State of Delaware to increase the number of authorized shares of common stock, which resulted in the recognition of a beneficial conversion feature on the Series A convertible preferred stock. Accordingly, we recorded $8.9 million in deemed dividends in the three months ended March 31, 2020, which was calculated as the difference between the conversion price and the fair value of our common stock on the commitment date (transaction date) in connection with the closing of concurrent equity financings during the fourth quarter of 2019.