8. STOCK-BASED COMPENSATION

Stock option activity under the Company’s 2012 Equity Incentive Plan (the “2012 Plan”) and 2013 Equity Incentive Plan (the “2013 Plan”) for the nine months ended September 30, 2018 is summarized as follows:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2017		2,158,348		$	4.40		8.1	$	436
Granted		1,530,150			2.38
Exercised		(919	)		2.56
Cancelled		(32,001	)		2.71
Outstanding at September 30, 2018		3,655,578		$	3.57		8.3	$	—
Vested and expected to vest at September 30, 2018		3,288,917		$	3.69		8.2	$	—
Exercisable at September 30, 2018		1,460,898		$	4.86		7.2	$	—

As of September 30, 2018, the unrecognized compensation cost related to outstanding options was $2.5 million and is expected to be recognized as expense over approximately 2.51 years. As of September 30, 2018, the weighted average grant date fair value of vested options was $3.25 and the weighted average grant date fair value of options outstanding was $2.33. On October 1, 2018, the Company approved a repricing of 2,774,140 stock options granted prior to September 1, 2018. See Note 12 for further discussion of the repricing.

The weighted average grant date fair value per share of employee option grants was $1.06 and $1.14 for the three months ended September 30, 2018 and 2017, respectively, and $1.77 and $1.01 for the nine months ended September 30, 2018 and 2017, respectively.

Stock-Based Compensation Expense

The Company granted stock options to employees during the three and nine months ended September 30, 2018 and 2017. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option pricing model and restricted stock based on the stock price, with the exception of those stock options that included a market condition. The Company estimates the fair value of stock options that include a market condition using a Monte-Carlo model. Stock options and restricted stock issued to non-board member, non-employees are accounted for using the fair value approach and are subject to periodic revaluation over their vesting terms.

Stock-based compensation expense amounted to $0.4 million and $0.4 million for the three months ended September 30, 2018 and 2017, respectively, and $1.2 million and $1.2 million for the nine months ended September 30, 2018 and 2017, respectively.

The allocation of stock-based compensation for all options granted and restricted stock awards is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
Research and development	$	131	$	86	$	352	$	326
General and administrative		307		283		897		907
Total stock-based compensation expense	$	438	$	369	$	1,249	$	1,233

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Risk-free interest rate		2.92	%		1.95	%		2.77	%		2.03	%
Expected volatility		86.4	%		60.0	%		87.5	%		63.1	%
Expected term (in years)		6.08		6.08				6.08			6.08
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the non-employee stock option grants were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Risk-free interest rate		1.97	%		1.35	%		1.97	%		1.28	%
Expected volatility		74.0	%		59.7	%		74.0	%		63.0	%
Expected term (in years)		6.08			6.08			6.08			6.08
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%