Stockholders’ Equity

Preferred Stock

Our board of directors has the authority to fix and determine and to amend the number of shares of any series of preferred stock that is wholly unissued or to be established and to fix and determine and to amend the designation, preferences, voting powers and limitations, and the relative, participating, optional or other rights, of any series of shares of preferred stock that is wholly unissued or to be established. There was no preferred stock issued and outstanding as of September 30, 2015 or December 31, 2014.

Common Stock

We had 20,142,715 and 16,878,817 shares of common stock outstanding as of September 30, 2015 and December 31, 2014, respectively. Shares of common stock reserved for future issuance were as follows:



	September 30, 2015	December 31, 2014
	(unaudited)
Shares to be issued under the employee stock purchase plan	321,309	155,220
Shares to be issued upon exercise of outstanding stock options	2,307,967	1,907,091
Shares available for future stock option grants	1,334,553	1,274,067
Shares of common stock reserved for future issuance	3,963,829	3,336,378

Equity Incentive Plans

On January 1, 2015, in accordance with provisions of our 2014 Employee Stock Purchase Plan (2014 ESPP) the authorized shares available under the plan were increased by 168,788 shares. The initial offering period was from April 1, 2015 through June 30, 2015 and on June 30, 2015, 2,699 shares were purchased under the 2014 ESPP. The current offering period is from July 1, 2015 through December, 31, 2015. The 2014 ESPP expires on May 23, 2024, or if earlier, at such time as all shares of common stock that may be made available for purchase under the 2014 ESPP have been issued.

On January 1, 2015, in accordance with provisions of our 2014 Omnibus Incentive Plan (2014 Plan), the authorized shares increased by 675,152 shares. There were a total of 2,084,913 shares of common stock authorized under the 2014 Plan as of September 30, 2015. The 2014 Plan expires on July 29, 2024, unless earlier terminated by our board of directors.

Stock Option Activity

Summary stock option information is as follows:



	OPTIONS OUTSTANDING		WEIGHTED- AVERAGE EXERCISE PRICE		WEIGHTED- AVERAGE REMAINING CONTRACT TERM (in years)	AGGREGATE INTRINSIC VALUE (in thousands)
Outstanding at December 31, 2014	1,907,091		$	4.16	8.16	$	50,847
Granted (unaudited)	711,394		$	27.50
Exercised (unaudited)	(213,790	)	$	1.39
Forfeited (unaudited)	(96,728	)	$	18.61
Outstanding at September 30, 2015 (unaudited)	2,307,967		$	10.97	8.11	$	14,549
Vested and expected to vest after September 30, 2015 (unaudited)	2,177,111		$	10.59	8.06	$	14,094
Exercisable as of September 30, 2015 (unaudited)	958,335		$	2.80	7.06	$	9,274

As of September 30, 2015, there was $13.9 million of total unrecognized stock-based compensation expense related to nonvested stock options that is expected to be recognized over a weighted-average period of 3.0 years. The total intrinsic value of options exercised during the nine months ended September 30, 2015 and 2014 was $4.9 million and $188,000, respectively.

Stock-Based Compensation Expense

Employee stock-based compensation expense recognized was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates. Total stock-based compensation expense recognized in our condensed statement of operations is as follows (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014
	(unaudited)
Employee:
Research and development	$	480		$	131	$	1,369	$	274
General and administrative	866			220		2,811		449
Non-Employee:
Research and development	(8		)	73		88		155
General and administrative	69			—		183		—
Total stock-based compensation expense	$	1,407		$	424	$	4,451	$	878

We use the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date.

To estimate the fair value of our common stock prior to our IPO, our board of directors periodically determined the per share fair value of our common stock at various dates using valuations performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation. We performed these valuations contemporaneously as of December 31, 2012, October 16, 2013 and March 31, 2014. For financial reporting purposes, we also performed a retrospective valuation as of December 31, 2013. Upon the completion of our IPO, the fair value of our common stock has been determined by the trading value of our common stock on NASDAQ.

The fair values of stock options granted to employees were calculated using the following assumptions:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
	(unaudited)

Weighted-average estimated fair value	$12.60	$12.05	$21.20	$6.91
Risk-free interest rate	1.64% - 1.86%	1.96% - 2.05%	1.50% - 1.86%	1.76% - 2.16%
Expected term of options (in years)	6.08	5.84 - 6.11	5.50 - 6.08	5.50 - 6.75
Expected stock price volatility	78% - 83%	90% - 93%	78% - 91%	90% - 93%
Expected dividend yield	—	—	—	—