Stock Compensation Plans

Equity Incentive Plans

Our 2014 Equity Incentive Plan, or the 2014 Plan, became effective in April 2014 and replaced our 2012 Stock Option Plan, or the 2012 Plan, with respect to future awards. The 2014 Plan provides for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards and performance units to employees, directors, and consultants.

Shares available for grant under the 2014 Plan included any shares remaining available or becoming available in the future under the 2012 Plan due to cancellation or forfeiture. In addition, the 2014 Plan provides for annual increases in the number of shares available for issuance thereunder beginning upon its effective date in April 2014, and on each annual anniversary, equal to the lower of:


•	1,200,000 shares of our common stock;


•	3% of the outstanding shares of our common stock on the second-to-the-last day prior to each anniversary date of the effectiveness date of our IPO; or


•	an amount as our board of directors may determine.

Shares available for grant under the 2014 Plan totaled 345,486 shares as of March 31, 2016.

Option grants under the 2014 and 2012 Plans generally vest over four years except for performance-based stock options. Our performance-based stock options will fully vest and become exercisable only on achievement of the performance condition while the participant is a continuing service provider. Options generally expire ten years from the grant date (or earlier in accordance with the terms of the Plans and the related stock option agreement).

Options granted under our 2012 Plan are exercisable immediately, subject to a repurchase right that lapses as the option vests. Through March 31, 2016, options for the purchase of 74,970 shares of our common stock have been exercised prior to vesting, all of which were vested and not subject to repurchase as of March 31, 2016. During the three months ended March 31, 2016, 11,512 of these shares vested resulting in a decrease in the repurchase liability of $23,000. We have not repurchased any shares related to these early exercises, and there was no repurchase liability as of March 31, 2016.

The following table summarizes stock option activity:



	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2016	3,716,520		$	7.76
Granted	30,185		$	8.97
Exercised	(8,098	)	$	3.92
Forfeited or expired	(4,896	)	$	16.74
Outstanding as of March 31, 2016	3,733,711		$	7.76	7.45	$	8,998,083
Options vested and expected to vest as of March 31, 2016	3,644,575		$	7.73	7.41	$	8,761,671
Options exercisable as of March 31, 2016	2,771,815		$	7.64	6.78	$	5,812,571

Stock-Based Compensation Expense

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2016 and 2015 was $6.04 and $17.87, respectively. The following are the ranges of underlying assumptions used in the BSM option pricing model to determine the fair value of stock options granted to employee and to non-employees:



	Three Months Ended March 31,
	2016	2015
Employees:
Risk-free interest rate	1.7%	1.8% - 1.9%
Expected dividend yield	0%	0%
Expected volatility	77.1%	92.2%
Expected term of options (years)	6.0	5.9
Fair value of common stock	$8.97	$19.75 - $26.13
Non-employees:
Risk-free interest rate	0.6% - 1.4%	0.2% - 0.4%
Expected dividend yield	0%	0%
Expected volatility	76.9% - 84.9%	60.8% - 70.6%
Expected term of options (years)	0.8 - 5.5	0.3 - 1.8
Fair value of common stock	$9.07	$25.01

Total stock-based compensation expense for all stock awards recognized in our condensed consolidated statements of operations is as follows (in thousands):



	Three Months Ended March 31,
	2016		2015
Employees:
Research and development	$	392	$	251
General and administrative	531		327
Total	$	923	$	578
Non-employees:
Research and development	$	63	$	217
General and administrative	12		8
Total	$	75	$	225

As of March 31, 2016, there was $5.5 million and $581,000 of total compensation cost related to unvested employee and non-employee stock option awards, respectively, not yet recognized. The fair value of the non-employee stock options is re-measured at each reporting date and, accordingly, the expense to be recognized will change, primarily with changes in the market value of our common stock. Stock-based compensation expense for employee and non-employee stock option awards is expected to be recognized over a remaining weighted-average vesting period of 2.09 years and 2.10 years, respectively.