STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION PLANS

Stockholder's Equity

On April 20, 2018, the Company completed an underwritten public offering of 920,000 shares of its common stock at a price of $75.00 per share, for an aggregate offering size of $69.0 million, pursuant to a registration statement on Form S-3. The net proceeds to the Company, after deducting underwriting discounts, and commissions and offering expenses was approximately $64.7 million.

On October 5, 2018, the Company entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC ("Jefferies"), as sales agent, pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of the Company’s common stock having an aggregate offering price of up to $60.0 million. The shares will be offered and sold pursuant to the Company’s prospective supplement to its shelf registration statement on Form S-3 (the “Prospective Supplement”). During the year ended December 31, 2019, the Company received $9.0 million in net proceeds from the sale of 259,115 shares of its common stock in the open market. On August 16, 2019, in connection with the Public Offering, the Company delivered written notice to Jefferies that the Company was suspending and terminating the Prospectus Supplement related to the shares of its common stock issuable pursuant to the Sale Agreement. The Company will not make any sales of its securities pursuant to the Sales Agreement, unless and until a new prospectus supplement is filed. Other than the termination of the Prospectus Supplement, the Sale Agreement remains in full force and effect.

Share-Based Compensation Plans

The Company has five share-based compensation plans, including the 2019 Equity Incentive Plan the ("2019 Plan") which was adopted in June 2019. Each plan authorizes the granting of shares of common stock and options to purchase common stock to employees and directors of the Company, as well as non-employee consultants, and allows the holder of the option to purchase common stock at a stated exercise price. The only plan under which the Company may currently grant equity awards is the 2019 Plan although there remain outstanding awards under the other four plans. Options vest according to the terms of the grant, which may be immediately or based on the passage of time, generally over four years, and have a term of up to 10 years. Unexercised stock options terminate on the expiration date of the grant. The Company recognizes the share-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

2019 Equity Incentive Plan

The 2019 Plan, is designed to secure and retain the services of the Company’s employees and directors. The 2019 Plan is successor to and continuation of the 2014 Equity Incentive Plan, as amended, the ("2014 Plan"), and no additional awards may be issued from the 2014 Plan. Subject to adjustment for certain changes in the Company’s capitalization, the aggregate number of shares of common stock that may be issued under the 2019 Plan, or the Share Reserve, will not exceed the sum of (i) 250,000 new shares, plus (ii) an additional 600,000 shares that were approved at the Company’s Special Meeting of Stockholders in January 2020, and plus (iii) the Prior Plans’ Returning Shares, as defined in the 2019 Plan documents, in an amount not to exceed 600,540 shares, including any stock award granted under the 2014 Plan, 2011 Stock Option Plan, as amended, or 2006 Stock Option Plan, as amended, that were outstanding as of the date the 2019 Plan was approved by the Company's stockholders, as such shares become available from time to time.

The following shares of common stock, or the 2019 Plan Returning Shares, will also become available again for issuance under the 2019 Plan: (i) any shares subject to a stock award granted under the 2019 Plan that are not issued because such stock award expires or otherwise terminates without all of the shares covered by such stock award having been issued; (ii) any shares subject to a stock award granted under the 2019 Plan that are not issued because such stock award is settled in cash; and (iii) any shares issued pursuant to a stock award granted under the 2019 Plan that are forfeited back to or repurchased by the Company because of a failure to vest.

The 2019 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, and other stock awards.

At December 31, 2019 and 2018, outstanding awards were comprised of the following:



	December 31, 2019	December 31, 2018
Options	471,282	401,535
Inducement option awards	96,560	122,500
Restricted stock units	5,609	19,490
Inducement restricted stock units outstanding	750	5,125
Total outstanding awards	574,201	548,650

Grant Date Fair Value

The valuation of the share-based compensation awards is a significant accounting estimate that requires the use of judgments and assumptions that are likely to have a material impact on the financial statements. The fair value of option grants is determined using the Black-Scholes option-pricing model. Expected volatilities utilized in the model are based on historical volatility of the Company’s common stock. Similarly, the dividend yield is based on historical experience and the estimate of future dividend yields. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The expected term of the options is based on the average period the stock options are expected to remain outstanding. As the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, the expected term is calculated as the midpoint between the weighted-average vesting term and the contractual expiration period also known as the simplified method.

The fair value of the option grants has been estimated, with the following weighted-average assumptions:



	Year Ended
	December 31, 2019		December 31, 2018
Options granted	276,830		262,319
Weighted-average exercise price	26.12		68.79
Weighted-average grant date fair value	16.99		45.10
Assumptions:
Risk-free interest rate	2.23	%	2.67	%
Volatility	72	%	72	%
Expected life (years)	6.04		6.08
Expected dividend yield	—	%	—	%

Share-Based Compensation Activity

The following table summarizes the stock option activity for all stock plans during the year ended December 31, 2019 and 2018 as follows:



Options	Outstanding Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2017	528,647		$	123.51	7.35	$	7,223
Granted	262,319		$	68.79
Exercised	(104,445	)	$	31.99
Forfeited	(110,597	)	$	155.64
Balance at December 31, 2018	575,924		$	109.01	8.09	$	87
Granted	276,830		$	26.12
Exercised	(220	)	$	25.50
Forfeited	(284,692	)	$	93.81
Balance at December 31, 2019	567,842		$	76.25	7.82	$	12
Exercisable at December 31, 2019	271,356		$	109.26	6.66	$	5

For the years ended December 31, 2019 and 2018, the Company received cash of $0.1 million and $3.3 million, respectively, upon option exercises.

The following table summarizes the options outstanding and exercisable at December 31, 2019:



Options Outstanding					Options Exercisable
Exercise Price	Total Shares	Weighted Average Remaining Contractual Term (in years)	Weighted Average Exercise Price		Total Shares	Weighted Average Remaining Contractual Term (in years)	Weighted Average Exercise Price
$5.10 to $27.99	116,935	8.23	$	19.72	19,560	2.12	$	24.78
$28.00 to $34.59	114,298	9.05	$	33.66	12,550	8.97	$	33.91
$34.60 to $78.49	112,977	7.78	$	68.77	68,586	7.22	$	70.77
$78.50 to $117.99	91,960	7.84	$	96.55	57,690	7.72	$	99.18
$118.00 to $234.70	131,672	6.42	$	155.68	112,970	6.32	$	160.77
Total	567,842	7.82	$	76.25	271,356	6.66	$	109.26

The following table summarizes the stock award activity for all stock plans during the year ended December 31, 2019:



Awards	Outstanding Restricted Stock Awards and Units		Weighted-Average Grant Date Fair Value Per Share		Outstanding Aggregate Intrinsic Value (in thousands)		Total Fair Value of Restricted Awards Vested (in thousands)
Balance at December 31, 2017	14,066		$	138.69	$	1,183
Granted	21,125		$	71.36
Vested	(5,723	)	$	158.47	$	420	$	907
Forfeited	(4,853	)	$	118.85
Balance at December 31, 2018	24,615		$	80.23	$	719
Granted	3,000		$	33.30
Vested	(14,478	)	$	64.16	$	240	$	929
Forfeited	(6,778	)	$	82.44
Balance at December 31, 2019	6,359		$	92.29	$	82

2014 Employee Stock Purchase Plan

The 2014 Employee Stock Purchase Plan, the ("ESPP"), provides for eligible Company employees, as defined by the ESPP, to be given an opportunity to purchase the Company's common stock at a discount, through payroll deductions, with stock purchases being made upon defined purchase dates. The ESPP authorizes the issuance of up to 55,000 shares of the Company’s common stock to participating employees and allows eligible employees to purchase shares of common stock at a 15% discount from the lesser of the grant date or purchase date fair market value.

A summary of activity within the ESPP follows:



	Year Ended
(in thousands except share data)	December 31, 2019		December 31, 2018
Deductions from employees	$	70	$	221
Share-based compensation expense recognized	$	95	$	138
Remaining share-based compensation expense	$	206	$	464
Proceeds received by the Company for ESPP	$	98	$	205
Weighted-average purchase price per common share	$	12.25	$	45.30
Number of shares purchased by employees under ESPP	8,000		4,539

As of December 31, 2019, there were 33,463 shares available for issuance under the ESPP.

Share-Based Compensation Expense

Share-based compensation expense by classification for December 31, 2019 and 2018 are as follows:



	Year Ended
(in thousands)	December 31, 2019		December 31, 2018
General and administrative	$	4,017	$	7,479
Research and development	3,321		6,345
Total	$	7,338	$	13,824

At December 31, 2019, total compensation cost not yet recognized was $7.4 million and the weighted-average period over which this amount is expected to be recognized is 1.98 years. The aggregate fair value of options and restricted shares vesting in the years ended December 31, 2019 and 2018 was $8.9 million and $13.9 million, respectively.