Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

12.	Stock-Based Compensation

In the accompanying condensed consolidated statements of operations, the Company recognized stock-based compensation expense for its employees and

non-employees

as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Research and development	$	933	$	1,229	$	1,479	$	2,413
General and administrative		2,684		529		3,056		1,044

Total stock-based compensation	$	3,617	$	1,758	$	4,535	$	3,457

Determination of Fair Value

The fair values of the Company’s stock-based awards granted during the three and six months ended June 30, 2020 and 2019 were estimated as of the grant date using the Black-Scholes option pricing model, based on assumptions as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Expected term (in years)		5.3 – 7.0			5.3 – 6.1			5.3 – 7.0			5.3 – 6.9
Expected volatility		88 – 90	%		90 – 92	%		88 – 90	%		90 – 94	%
Risk-free interest rate		0.4 – 0.5	%		1.9 – 2.3	%		0.4 – 1.2	%		1.9 – 2.6	%
Expected dividend rate		—	%		—	%		—	%		—	%

Equity Incentive Plans

2018 Equity Inducement Plan

In September 2018, the Company’s Compensation Committee approved the 2018 Equity Inducement Plan (2018 Plan). The number of shares available for awards under the 2018 Plan was set to 37,500.

On June 30, 2020, the Company’s Board of Directors approved an amendment to the 2018 Plan to increase the authorized number of shares available for issuance by 500,000 shares. As of June 30, 2020, 537,500 shares were reserved for issuance under the 2018 Plan.

The exercise price of each stock-based award issued under the 2018 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a

10-year

life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2015 Plan

The 2015 Equity Incentive Plan (2015 Plan) became effective on July 14, 2015. On January 21, 2020 the Company’s stockholders approved the following amendments to the 2015 Plan: (i) increase to the authorized number of shares available for issuance by 4,312,500 shares and proportionately increase the share limit related to incentive stock options, (ii) provide limits on the total value of compensation that may be granted to any

non-employee

director in each calendar year, and (iii) eliminate the annual individual grant limit to reflect changes to the tax law in 2017 tax legislation.

As of June 30, 2020, 4,678,379 shares were reserved for issuance under the 2015 Plan. The number of shares reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The Company’s Board of Directors or Compensation Committee may reduce the amount of the increase in any particular year. The exercise price of each stock-based award issued under the 2015 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a

10-year

2008 Plan

The Company granted options under the 2008 Stock Plan (2008 Plan) until July 2015 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2008 Plan. The 2008 Plan provided for the granting of Incentive Stock Options (ISO), nonqualified stock options and stock purchase rights. In connection with the Board of Director’s approval of the 2015 Plan, all remaining shares available for future award under the 2008 Plan were transferred to the 2015 Plan, and the 2008 Plan was terminated.

A summary of activity under the 2008 Plan, 2015 Plan and 2018 Plan and related information is as follows:


				Options Outstanding
	Shares Available for Grant			Number of Shares Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of Outstanding Options (in thousands)
Outstanding — December 31, 2019		51,514			326,023		$	102.56		7.45	$	11
Awards authorized		4,887,187
Options granted		(2,055,130	)		2,055,130			13.51
Options forfeited/cancelled		30,098			(30,098	)		57.08

Outstanding — June 30, 2020		2,913,669			2,351,055		$	25.30		7.98	$	9

Exercisable — June 30, 2020					358,948		$	78.02		3.93	$	—

Vested and expected to vest — June 30, 2020					2,152,111		$	26.27		8.56	$	9

The weighted-average grant date fair values of options granted during the three and six months ended June 30, 2020 was $10.14 and $8.69 per share, and $20.80 and $56.00 per share during the three and six months ended June 30, 2019.

options were exercised for the three and six months ended June 30, 2020.

The aggregate intrinsic value of options exercised was insignificant for the three and six months ended June 30, 2019. The total grant date fair value of options vested for the three and six months ended June 30, 2020 was $2.2 million and $3.8 million, and $1.7 million and $4.3 million during the three and six months ended June 30, 2019

In May 2020, the Company entered into a separation agreement with Dr. Glover, the Company’s former President and Chief Executive Officer, in connection with his resignation. Pursuant to the separation agreement, Dr. Glover’s unvested options

that

would have vested during

the

one-yea

period

from the date of separation accelerated and vested immediately. The vesting date of all

remaining

unvested option

accelerated

by one year,

and will

vest in accordance with

the accelerated

vesting schedule as long as Dr. Glover is providing consulting services to the Company. All options that remain unvested following the termination of his consulting services will be cancelled. Furthermore, Dr. Glover

received

an extension of the expiration date of his

vested

stock

options

to 75

days

following

the Company’s announcement of

the

top-line

data results

from

its

MOMENTUM

clinical trial. Compensation costs relating to the vesting acceleration and the modifications to option terms

was

$2.2

million

for the three and six months ended June 30, 2020.

As of June 30, 2020, total unrecognized stock-based compensation related to unvested stock options was $19.2 million. These costs are expected to be recognized over a remaining weighted-average period of 3.3 years as of June 30, 2020.