Stockholders Equity

6 Months Ended

Jun. 30, 2016

Stockholders' Equity

Stockholders' Equity

7. Stockholders’ Equity

Common Stock

We are authorized to issue 100,000,000 shares of common stock, with a par value of $0.0001, or Common Stock, of which 24,769,083 were issued and outstanding at December 31, 2015 and June 30, 2016.

At the Market Offering

On March 13, 2015, we entered into a Sales Agreement with Guggenheim Securities, LLC, or Guggenheim, to offer shares of our Common Stock from time to time through Guggenheim, as our sales agent for the offer and sale of the shares.  We may offer and sell shares for an aggregate offering price of up to $25 million.  We did not make any sales under the Sales Agreement during the three and six months ended June 30, 2015 and 2016.

Purchase Agreement

On August 24, 2015, we entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which we have the right to sell to LPC up to $17,000,000 in shares of our Common Stock, subject to certain limitations and conditions set forth in the Purchase Agreement, over the period from August 24, 2015 to March 1, 2018.

As consideration for entering into the Purchase Agreement, we issued to LPC 103,364 shares of Common Stock on the date of the Purchase Agreement.  As consideration for LPC’s purchase of up to an additional $15,000,000 in shares of Common Stock, we will issue up to 34,455 shares of Common Stock to LPC on a pro-rata basis on each purchase date.  We will not receive any cash proceeds from the issuance of these shares.

Under the Purchase Agreement, on any business day and as often as every business day over the 30-month term of the Purchase Agreement, and up to an aggregate amount of an additional $15,000,000 (subject to certain limitations) in shares of Common Stock, we have the right at our sole discretion and subject to certain conditions to direct LPC to purchase up to 100,000 shares of Common Stock (with such amounts increasing up to 175,000 shares as the stock price increases, but not to exceed $1,000,000 in total purchase proceeds per purchase date).  The purchase price of shares of Common Stock pursuant to the Purchase Agreement will be based on the prevailing market price at the time of sale as set forth in the Purchase Agreement.  We will control the timing and amount of any sales of Common Stock to LPC.  In addition, we may direct LPC to purchase additional amounts as accelerated purchases if on the date of a regular purchase the closing sale price of the Common Stock is not below the “threshold price” as set forth in the Purchase Agreement.  We have the right to terminate the Purchase Agreement at any time, on one business days’ notice, at no cost or penalty.  We have agreed with LPC that we will not enter into any “variable rate” transactions with any third party from the date of the Purchase Agreement until the expiration of the 30-month period following the date of the Purchase Agreement, subject to certain exceptions.

From the effective date of the Purchase Agreement through December 31, 2015, we issued a total of 1,435,612 shares of Common Stock to LPC, including 105,379 shares of Common Stock issued to LPC as consideration for entering into the Purchase Agreement and purchasing additional shares, for gross proceeds of $2.9 million. We did not issue any shares under the Purchase Agreement during the three and six months ended June 30, 2016.

Stock-based compensation expense

Stock-based payments to employees, including grants of employee stock options, are recognized in the statements of operations and comprehensive loss based on fair value. Stock-based payments to non-employees are recognized at fair value on the date of grant and re-measured at each subsequent reporting date through the settlement of the instrument.

Stock-based compensation expense recognized by award type is as follows:

	Three Months Ended				Six months ended
	June 30,				June 30,
	2015		2016		2015		2016
Options awards	$	1,233,950	$	618,896	$	2,561,157	$	1,659,704
Restricted stock awards		59,063		(55,781)		352,687		(167,344)
Total stock-based compensation expense	$	1,293,013	$	563,115	$	2,913,844	$	1,492,360

Total compensation cost recognized for all stock-based compensation awards in the statements of operations and comprehensive loss is as follows:

	Three Months Ended				Six months ended
	June 30,				June 30,
	2015		2016		2015		2016
Research and development	$	347,281	$	27,588	$	816,959	$	64,639
General and administrative		945,732		535,527		2,096,885		1,427,721
Total stock-based compensation expense	$	1,293,013	$	563,115	$	2,913,844	$	1,492,360

A summary of activity for all options for the six months ended June 30, 2016 is presented below:

		Weighted Average		Weighted Average	Aggregate
		Exercise Price		Contractual	Intrinsic
	Shares	Per Share		Life (In Years)	Value
Outstanding—December 31, 2015	4,020,783	$	5.48	7.8	$	—
Granted	—		—
Exercised	—		—
Forfeited	(986,145)		5.45
Outstanding—June 30, 2016	3,034,638	$	5.49	7.2	$	—
Vested and expected to vest—June 30, 2016	3,027,715	$	5.49	7.2	$	—
Exercisable at June 30, 2016	2,628,632	$	5.48	7.0	$	—

We had 225,000 and 450,000 shares of unvested restricted stock outstanding at June 30, 2016 and December 31, 2015, respectively.  During the three and six months ended June 30, 2016, 225,000 shares of unvested restricted stock were forfeited.

As of June 30, 2016, there was $1.7 million, net of estimated forfeitures, of total unrecognized compensation expense related to unvested stock options which we expect to recognize as compensation expense over a weighted average attribution period of 1.1 years, subject to acceleration if the market condition is met for those awards that contain a market condition.  In addition, there was $0.6 million of total unrecognized compensation expense related to unvested shares of restricted stock which we expect to recognize as compensation expense over a weighted average attribution period of 1.6 years, subject to acceleration if the market condition is met for those awards that contain a market condition.

Warrants

We currently have the following warrants outstanding to purchase shares of our Common Stock:

		Number of
		Shares	Exercise
Warrant Series	Underlying Equity Security	Issuable	Price		Expiration Date
2007 Warrant	common stock	1,961	$	7.65	May 2017
2009/2010 Warrants	common stock	52,815	$	0.85	November 2019-March 2020

Our 2009/2010 Warrants are classified as derivative liabilities on our balance sheets with subsequent changes to fair value recorded through earnings at each reporting period on our statements of operations and comprehensive loss as change in fair value of derivative liabilities. See Note 3 with respect to fair value.  A total of 21,786 of our 2006 Warrants expired unexercised in March 2016 and May 2016.