Equity Incentive Plans

6 Months Ended

Jun. 30, 2020

Equity Incentive Plans

Equity Incentive Plans

NOTE 7. EQUITY INCENTIVE PLANS

Stock Option Plan

During the three and six months ended June 30, 2020, options were granted to employees and members of the board of directors to purchase 729,727 and 2,649,516 shares, respectively, of the Company's common stock. The weighted-average grant-date estimated fair value of options granted during the three and six months ended June 30, 2020 was $5.14 and $5.19, respectively. The estimated grant date fair value of employee stock options was calculated using the Black-Scholes option-pricing model, based on the following weighted-average assumptions:

	Six Months Ended June 30,
	2020
Expected term (years)	6.00
Expected volatility	83.55	%
Risk-free interest rate	1.33	%
Dividend yield	—	%

During the three and six months ended June 30, 2020, options were exercised to purchase 63,064 and 204,615 shares, respectively, of the Company's common stock, resulting in corresponding approximately $0.2 million and $0.4 million net proceeds, respectively, to the Company. During the three and six months ended June 30, 2019, options were exercised to purchase 1,681 and 2,451 shares, respectively, of the Company's common stock, resulting in corresponding insignificant net proceeds to the Company.  

Restricted Stock Units (“RSUs”)

In July 2018, the Company granted 903,374 performance-based restricted stock units (“PRSUs”) to its employees that vest upon the achievement of certain performance conditions, subject to the employees’ continued service relationship with the Company through the achievement date. As of June 30, 2020, 849,328 of these PRSUs were outstanding and none of these PRSUs were vested.  Additionally, during the three months ended June 30, 2020, the Company granted 30,000 PRSUs with the same performance criteria to its recently hired chief commercial officer and chief financial officer, of which none vested and those 30,000 PRSU’s are also outstanding at June 30, 2020. Based on the evaluation of the performance conditions, the Company recorded stock-based compensation expense of $0.6 million and $1.4 million for the three and six months ended June 30, 2020, respectively. The Company had not recorded stock-based compensation expense for the three and six months ended June 30, 2019 related to these PRSUs. The related compensation cost is

recognized as an expense ratably over the estimated vesting period. The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted.

For each of the three and six months ended June 30, 2020 and 2019, the Company issued zero and 85,609 shares, respectively, of its common stock upon vesting of time-based RSUs to its employees. No time-based RSUs were granted to employees during the three and six months ended June 30, 2020 or 2019.  

Employee Stock Purchase Plan

In February 2020, the Company sold 75,804 shares of its common stock under the Company’s employee stock purchase program (“ESPP”). The shares were purchased by employees at a purchase price of $4.95 per share with proceeds to the Company of approximately $0.4 million. In February 2019, the Company sold 83,046 shares of its common stock under the ESPP. The shares were purchased by employees at a purchase price of $2.39 per share with proceeds to the Company of approximately $0.2 million.

Issuance of Common Stock for Services

For the three and six months ended June 30, 2020, the Company issued 42,403 shares of its common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under the Company’s Amended and Restated Non-Employee Director Compensation Program. The shares issued were valued at $0.3 million based on the fair value of the common stock on the date of grant. For the three and six months ended June 30, 2019, the Company issued 113,136 shares of its common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under the Company’s Amended and Restated Non-Employee Director Compensation Program. The shares issued were valued at $0.3 million based on the fair value of the common stock on the date of grant.

Stock-Based Compensation

Stock-based compensation expense recognized for stock options, RSUs, PRSUs and the Company’s ESPP are recorded as operating expenses in the Company’s condensed statements of operations and comprehensive loss, as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development	$	1,144	$	767	$	2,202	$	1,527
General and administrative		1,530		1,156		3,420		2,318
Total	$	2,674	$	1,923	$	5,622	$	3,845

As of June 30, 2020, the Company’s total unrecognized stock-based compensation expense, net of estimated forfeitures, and average remaining vesting period, included the following:

	Unrecognized Compensation Expense		Average Remaining Vesting Period (Years)
Stock options	$	15,202	2.8
PRSUs	$	396	0.2
ESPP	$	78	0.2

 Warrants

In June 2015, the Company had sold and issued warrants to purchase 2,172,899 shares of common stock. The purchase price for the warrants was $0.125 per warrant. The warrants were exercisable for an exercise price of $13.91 per share at any time prior to the earlier of (i) 5 years from the date of issuance or (ii) certain changes in control of the Company. The Company had determined that the warrants should be classified as equity. In June 2020, the warrants expired with none of the warrants exercised.