Stockholders’ Equity (Deficit)

Common Stock

On August 23, 2018, the Company amended and restated its Certificate of Incorporation in connection with the IPO. The Company’s Amended and Restated Certificate of Incorporation authorizes 200,000,000 shares of common stock, $0.0001 par value per share, and 10,000,000 shares of preferred stock, $0.0001 par value per share, all of which shares of preferred stock are undesignated. Of the 200,000,000 authorized shares of common stock, 10,897,522 shares were issued and outstanding as of June 30, 2019.

During the three months ended June 30, 2019 and 2018, the company issued 8,526 and 551 shares of common stock in connection with the exercise of stock options for net proceeds of $11,084 and $707, respectively. During the six months ended June 30, 2019 and 2018, the company issued 50,047 and 788 shares of common stock in connection with the exercise of stock options for net proceeds of $65,060 and $1,012, respectively.

Sale of Common Stock

In March 2019, the Company entered into a Common Stock Purchase Agreement (the "Aspire Purchase Agreement") with Aspire Capital Fund, LLC (Aspire Capital) which provides that, upon the terms and subject to the conditions and limitations therein, Aspire Capital is committed to purchase up to an aggregate of $10.0 million of shares of the Company’s common stock. Concurrently with entering into the Aspire Purchase Agreement, the Company also entered into a registration rights agreement with Aspire Capital, in which the Company agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act of 1933, as amended, the sale of the shares of the Company’s common stock that have been and may be issued to Aspire Capital under the Aspire Purchase Agreement.

Upon execution of the Aspire Purchase Agreement, the Company sold 272,479 shares of the Company’s common stock to Aspire Capital at $3.67 per share for net proceeds of approximately $1.0 million. Aspire Capital is committed to purchase up to $9.0 million of additional shares of common stock solely at the Company’s request from time to time during a 30 month period beginning on April 23, 2019 and at a per share purchase price equal to the lesser of:


•	the lowest sale price of the Company’s common stock on the purchase date; or


•	the average of the three lowest closing sale prices for the Company’s common stock during the ten consecutive trading days ending on the trading day immediately preceding the purchase date.

In consideration for entering into the Aspire Purchase Agreement and concurrently with the execution of the Aspire Purchase Agreement, the Company issued 69,444 shares of its common stock to Aspire Capital. The value of these shares was netted against the proceeds received as issuance costs.

Convertible Preferred Stock

Prior to the IPO, there were 121,992,497 shares of convertible preferred stock outstanding. The Company’s convertible preferred stock had been classified as temporary equity in accordance with authoritative guidance for the classification and measurement of redeemable securities.

In August 2018, due to completion of a public offering meeting certain requirements, each 42.8 shares of the Company's convertible preferred stock was converted into one share of common stock at a conversion price of $1.3995 for each share of Series A, B and B-1 convertible preferred stock, $1.4043 for each share of Series C convertible preferred stock and $0.48 for each share of Series D and D-1 convertible preferred stock. The Company’s convertible preferred stock had been classified as temporary equity on the accompanying balance sheets in accordance with authoritative guidance for the classification and measurement of redeemable securities. As of June 30, 2019, there are no shares of the Company's convertible preferred stock outstanding.

Stock Options

In August 2018, the Company’s board of directors (the “Board”) and its stockholders adopted the 2018 Equity Incentive Plan (the “2018 Plan”), as a successor to and continuation of the Company’s 2006 Equity Incentive Plan (the “2006 Plan”). Under the 2018 Plan the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then its employees, directors and consultants, including employees and consultants of its affiliates. The Company has initially reserved 1,499,454 shares of common stock for issuance under the 2018 Plan, which is the sum of (1) 1,000,000 new shares, plus (2) the number of shares that remained available for issuance under the 2006 Plan at the time the 2018 Plan became effective, and (3) any shares subject to outstanding stock options or other stock awards that were granted under the 2006 Plan that would have otherwise returned to the 2006 Plan. In addition, the number of shares of common stock reserved for issuance under the 2018 Plan will automatically increase on January 1 of each calendar year through January 1, 2028, in an amount equal to 5% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Board.

As of June 30, 2019, there were 1,716,719 shares of common stock subject to outstanding options and 432,935 shares of common stock reserved for future stock awards under the 2018 Plan.

A summary of the Company’s stock option activity under the 2018 Plan and 2006 Plan is as follows:



	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	1,282,847		$	6.90	9.2
Granted	545,374		4.15
Exercised	(50,047	)	1.30
Cancelled/Expired	(61,455	)	15.06
Outstanding at June 30, 2019	1,716,719		$	5.99	9.0	$	366,055
Vested and exercisable at June 30, 2019	566,997		$	6.86	8.4	$	248,379

For the three months ended June 30, 2019 and 2018, the Company granted to its employees options to purchase 42,114 shares with a weighted average exercise price of $3.00 per share. The Company did not grant employee options during the three months ended June 30, 2018.

For the six months ended June 30, 2019 and 2018, the Company granted to its employees options to purchase 545,374 shares and 385 shares of its common stock with a weighted average exercise price of $4.15 per share and $1.28 per share, respectively.

For the three months ended June 30, 2019, the weighted-average grant date fair value of employee option grants was $1.71 per option. The Company did not grant employee options during the three months ended June 30, 2018.

For the six months ended June 30, 2019 and 2018, the weighted-average grant date fair value of employee option grants was $2.37 and $1.28 per option, respectively.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense for the three and six months ended June 30, 2019 and 2018 as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Research and development	$	57,687	$	9,253	$	110,590	$	18,867
General and administrative	277,979		43,728		514,471		88,559
Total stock-based compensation expense	$	335,666	$	52,981	$	625,061	$	107,426

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 June 30,			Six Months Ended June 30,
	2019		2018	2019		2018
Risk-free interest rate	2.0	%	—	2.4	%	2.5	%
Expected volatility	65.2-66.1%		—	64.3-67.3%		63.0	%
Expected term (in years)	5.4		—	5.0		4.0
Expected dividend yield	0.0	%	—	0.0	%	0.0	%

Risk-free interest rate. The risk-free rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.

Expected volatility. Due to the Company’s limited operating history and lack of company-specific historical or implied volatility as a private company, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.

Expected term. The expected term of stock options represents the weighted-average period the stock options are expected to be outstanding. The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded. As a result, the Company uses the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options.

Expected dividend yield. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.

Forfeitures. The Company reduces stock-based compensation expense for actual forfeitures during the period.

As of June 30, 2019 the unrecognized compensation cost related to outstanding employee options was $3.3 million and is expected to be recognized as expense over the remaining weighted-average vesting period of approximately 2.7 years.

Employee Stock Purchase Plan

In August 2018, the Board and the Company’s stockholders adopted the 2018 Employee Stock Purchase Plan (the “ESPP”). A total of 175,000 shares of common stock are initially reserved for issuance under the ESPP. In addition, the number shares of common stock reserved for issuance under the ESPP will automatically increase each on January 1 of each calendar year, beginning on January 1, 2019, through January 1, 2028, by the lesser of (1) 1% of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of the automatic increase, (2) 220,000 shares, or (3) a lesser number of shares as determined by the Board. As of June 30, 2019, 66,155 shares of common stock have been purchased under the ESPP.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consist of the following:



	June 30, 2019
Stock options issued and outstanding	1,716,719
Authorized for future stock awards, option grants, or employee stock purchase program	432,935
Common Warrants	4,224,494
Total	6,374,148