Stockholders' Equity

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity

8. Stockholders’ Equity

2012 Equity Incentive Plan

Under the Company’s 2012 Equity Incentive Plan, the Company may grant shares, stock units, stock appreciation rights, performance cash awards and/or options to employees, directors, consultants, and other service providers. For options, the per share exercise price may not be less than the fair market value of a Company common share on the date of grant. Awards generally vest and become exercisable over four years and expire 10 years from the date of grant.

A summary of stock option activity for the nine months ended September 30, 2015 under all of the Company’s options plans is as follows:

				Weighted
				Average
				Exercise
	Options			Price
Outstanding at December 31, 2014		334,686			$	34.00
Granted		296,045				3.59
Exercised		—				—
Cancelled (forfeited)		(96,158	)			24.55
Cancelled (expired)		(7,453	)			18.22
Outstanding at September 30, 2015		527,120			$	18.84

The weighted average fair value of options granted during the three months and nine months ended September 30, 2015 was $1.90 and $2.23 per share, respectively.

The Company valued the options granted using the Black-Scholes options pricing model and the following weighted-average assumption terms for the three months and nine months ended September 30, 2015:

	Three Months Ended			Nine Months Ended
Exercise price	$	3.23		$	3.59
Market value	$	3.23		$	3.59
Risk-free rate		1.62			1.61
Expected term		5.30			5.81
Expected volatility		69	%		70	%
Dividend yield		-			-

In addition, 3,750 restricted stock units were issued as of September 30, 2015.

2012 Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the “ESPP”) provided eligible employees with the opportunity to acquire an ownership interest in the Company through periodic payroll deductions, based on a six-month look-back period, at a price equal to the lesser of 85% of the fair market value of the ordinary shares at either the beginning of the offering period, or the fair market value on the purchase date. The ESPP was structured as a qualified employee stock purchase plan under Section 423 and a qualified pension, profit sharing or stock bonus plan under Section 401(a) of the Internal Revenue Code of 1986 and was not subject to the provisions of the Employee Retirement Income Security Act of 1974. There were 21,058 shares initially authorized for issuance under the plan, and the first offering period commenced on June 1, 2014 and ended on October 31, 2014. The second offering period commenced on November 1, 2014 and ended on April 30, 2015. There were 583 and 375 shares issued under the plan on October 31, 2014 and April 30, 2015, respectively. Under the terms of the ESPP, offerings subsequent to the second offering were to commence on May 1 and November 1 and end on April 30 and October 31 each year.  As of September 30, 2015, there were 20,100 shares available for grant under the ESPP. On May 3, 2016, the ESPP was terminated.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss as follows:

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
(in thousands)		2015		2014			2015		2014
General and administrative		$	137	$	282		$	466	$	755
Research and development			134		184			447		729
		$	271	$	466		$	913	$	1,484

During the nine months ended September 30, 2015, the Company recorded charges of $389,000 and $479,000 relating to the fair value of stock options that were modified due to executive retirement and restructuring activities, and classified $484,000 and $384,000, as general and administrative expenses and research and development expenses, respectively.

At September 30, 2015, the Company had $1.4 million of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to outstanding stock options that will be recognized over a weighted-average period of 1.4 years.

Reverse Stock Split

On July 13, 2015, the Company effected a one-for-eight reverse split of its outstanding common stock pursuant to an amendment to the Company’s certificate of incorporation. As a result of the reverse stock split, each eight shares of the Company’s common stock were combined into one share of common stock. The reverse stock split was effective with respect to stockholders of record at the close of business on July 13, 2015, and trading of the Company’s common stock on the Nasdaq Global Market began on a split-adjusted basis on July 14, 2015. Holders of common stock who would have otherwise received fractional shares of the Company’s common stock pursuant to the reverse split received cash in lieu of the fractional share. The reverse split reduced the total number of shares of the Company’s common stock outstanding from approximately 33.0 million shares to approximately 4.1 million shares. In addition, the number of shares of common stock subject to outstanding options, restricted stock units and warrants issued by the Company and the number of shares reserved for future issuance under the Company’s stock plans were reduced by a factor of eight to proportionately reflect the reverse split, and per share exercise prices were increased by a factor of eight. The reverse split was accounted for retroactively and is reflected in the Company’s common stock, warrant, stock option and restricted stock activity as of and for the three and nine months ended September 30, 2015 and 2014. Unless stated otherwise, all share data in the financial statements and accompanying notes have been adjusted, as appropriate, to reflect the reverse split. The par value per share and number of authorized shares were not adjusted as a result of the reverse stock split.