Stockholders’ Equity and Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stockholders’ Equity and Stock-Based Compensation

Follow-on Public Offering

In April 2020, the Company completed an underwritten public offering of 16,896,000 shares of its common stock and, to certain investors, pre-funded warrants to purchase 37,650,000 shares of its common stock, and accompanying common warrants to purchase up to an aggregate of 54,546,000 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock. The public offering price of each share of common stock and accompanying common warrant was $0.33 and $0.329 for each pre-funded warrant. The pre-funded warrants are immediately exercisable at a price of $0.001 per share of common stock. The common warrants are immediately exercisable at a price of $0.33 per share of common stock and will expire five years from the date of issuance. The shares of common stock and pre-funded warrants, and the accompanying common warrants, were issued separately and were immediately separable upon issuance. The gross proceeds to the Company were approximately $18.0 million before deducting underwriting discounts and commissions and other offering expenses of $1.6 million.

Stock Warrants

A summary of the Company’s warrant activity for the nine months ended September 30, 2020 was as follows:


	Shares of Stock under Warrants	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2020	24,406,000	$	1.76	4.82	$	7,933,000
Granted	95,396,000	0.22		4.53
Exercised	(90,093,000)	0.21			37,150,000
Canceled	—
Outstanding at September 30, 2020	29,709,000	$	1.54	4.11	$	1,813,000
Vested and exercisable at September 30, 2020	29,709,000	$	1.54	4.11	$	—

Shelf Registration Statement and At-the-Market Facility

In August 2020, the Company filed a shelf registration statement on Form S-3 with the SEC covering the offering, issuance and sale of up to $125.0 million of the Company’s securities, including up to $40.0 million of common stock pursuant to an at-the-market facility (“ATM”) with Ladenburg Thalmann & Co. Inc. acting as sales agent. As of September 30, 2020, the Company had not sold any shares of common stock under the ATM.

Stock-Based Compensation

Stock Options

A summary of the Company’s stock option activity under the Company's equity incentive plans for the nine months ended September 30, 2020 was as follows:


	Shares of Stock under Stock Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2020	1,743,000	$	5.73	8.2	$	4,000
Granted	4,250,000	0.67
Exercised	—	—			$	—
Canceled	(662,000)	3.52
Outstanding at September 30, 2020	5,331,000	$	1.97	8.96	$	353,000
Vested and exercisable at September 30, 2020	1,119,000	$	5.10	7.31	$	—

For the three months ended September 30, 2020 and 2019, the Company granted to its employees options to purchase 2,659,000 and 29,800 shares with a weighted average exercise price of $0.55 and $2.33 per share, respectively. For the nine months ended September 30, 2020 and 2019, the Company granted to its employees options to purchase 4,250,000 and 706,640 shares with a weighted average exercise price of $0.67 and $3.82 per share, respectively.

For the three months ended September 30, 2020 and 2019, the weighted-average grant date fair value of stock options granted was $0.35 and $1.42 per share, respectively. For the nine months ended September 30, 2020 and 2019, the weighted-average grant date fair value of stock options granted was $0.43 and $2.19 per share, respectively.

The Company recognized stock-based compensation expense for the periods presented were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	122,000	$	59,000	$	255,000	$	169,000
General and administrative	325,000		305,000		848,000		821,000
Total stock-based compensation expense	$	447,000	$	364,000	$	1,103,000	$	990,000

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


	Three Months Ended September 30,				Nine months Ended September 30,
	2020		2019		2020		2019
Risk-free interest rate	0.4	%	1.8	%	0.8	%	2.4	%
Expected volatility	77.9	%	68.2	%	74.8	%	68.2	%
Expected term (in years)	5.5		6.1		5.9		5.1
Expected dividend yield	0.0	%	0.0	%	0.0	%	0.0	%