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 December 31, 2017 and December 31, 2016.

Public Offerings

In April 2015, we closed an underwritten public offering of 3,000,000 shares of our common stock at a price of $26.50 per share. In May 2015, we sold an additional 47,409 shares directly to our underwriters when they exercised a portion of their option to purchase additional shares at $26.50 per share. We received net proceeds of $75.4 million (inclusive of the exercise of a portion of the underwriters’ option to purchase additional shares), after underwriting discounts and commissions and offering expenses totaling $5.4 million.

In September 2016, we closed an underwritten public offering of 5,226,369 shares of common stock at a price of $6.25 per share. We received net proceeds of $30.3 million (inclusive of the exercise of a portion of the underwriters’ option to purchase additional shares), after underwriting discounts and commissions, and offering expenses totaling $2.4 million.

In October 2017, we closed an underwritten public offering of 22,425,000 shares of common stock at a price of $4.10 per share. We received net proceeds of $86.6 million (inclusive of the exercise of a portion of the underwriters’ option to purchase additional shares), after underwriting discounts and commissions, and offering expenses totaling $5.4 million.

Common Stock

We had 48,068,650 and 25,413,055 shares of common stock outstanding as of December 31, 2017 and 2016, respectively. Shares of common stock reserved for future issuance were as follows:



	AS OF DECEMBER 31,
	2017	2016

Shares available for issuance under the employee stock purchase plan	475,010	503,620
Options granted and outstanding	4,094,532	3,590,393
Unvested restricted stock units	195,172	107,250
Shares available for future option grants and restricted stock awards	947,199	724,723
Shares reserved for future issuance under equity incentive plans	5,711,913	4,925,986

Equity Incentive Plans

2014 Employee Stock Purchase Plan

In April 2014, our board of directors adopted, and in July 2014 our stockholders approved, the 2014 Employee Stock Purchase Plan (2014 ESPP). The total number of shares of common stock available for issuance under the 2014 ESPP may increase annually on January 1 by (i) the lesser of 1% of the total number of shares issued and outstanding as of December 31 of the immediately preceding year or (ii) 200,000 shares, or less as deemed appropriate by the Board of Directors. For 2017, the Board of Directors determined the current shares available to be issued under the 2014 ESPP was sufficient and did not increase the amount of authorized shares.

2008 Equity Incentive Plan and 2014 Omnibus Incentive Plan

In 2008, we adopted the 2008 Equity Incentive Plan (2008 Plan) for eligible employees, officers, directors, and consultants, which provided for the grant of incentive and non-statutory stock options, restricted stock awards, restructured stock unit awards grant, and stock appreciation rights. The terms of the stock awards, including vesting requirements, were determined by the board of directors, subject to the provisions of the 2008 Plan.

In April 2014, our board of directors adopted, and in July 2014 our stockholders approved, the 2014 Omnibus Incentive Plan (2014 Plan) which provides for the granting of certain awards to eligible employees, officers, directors, and consultants. Upon approval of the 2014 Plan by the stockholders in July 2014, 1,400,000 shares of our common stock were reserved for issuance under the 2014 Plan, and we ceased granting stock awards under the 2008 Plan. All shares of common stock subject to awards under the 2008 Plan that expire, terminate, or are otherwise surrendered, canceled, forfeited or repurchased without having been fully exercised or resulting in the issuance of common stock become available for issuance under the 2014 Plan.

Stock options granted under the 2008 and 2014 Plans generally vest within four years, and vested options are exercisable until ten years after the date of grant. Vesting of certain employee options may be accelerated in the event of a change in control of our company. We grant stock options to employees with exercise prices equal to the fair value of our common stock on the date of grant. There were a total of 3,927,135 shares of common stock authorized under the 2014 Plan as of December 31, 2017.

The total number of shares of common stock available for issuance under the 2014 Plan will automatically increase annually on January 1 by 4% of the total number of shares issued and outstanding as of December 31 of the immediately preceding year. On January 1, 2017, in accordance with the 2014 Plan annual increase provisions, the authorized shares increased by 1,016,522 shares.

Restricted Stock Units

In 2016, we began issuing restricted stock units (RSUs) to employees under the 2014 Plan. The fair value of the RSUs is determined on the date of grant based on the market price of our common stock. RSUs are recognized as an expense ratably over the vesting period and our RSUs generally vest over four years with 25% of the total award vesting on each anniversary of the vesting commencement date.

Summary RSU information is as follows:



	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2016	—		$	—
Granted	118,000		$	19.39
Vested	—		$	—
Canceled/Forfeited	(10,750	)	$	19.39
Outstanding at December 31, 2016	107,250		$	19.39
Granted	224,540		$	5.60
Vested	(26,802	)	$	19.39
Canceled/Forfeited	(109,816	)	$	6.13
Outstanding at December 31, 2017	195,172		$	10.99

During the year ended December 31, 2017, the total estimated grant date fair value for RSUs granted was $1.3 million. The total fair value of RSUs vested was $150,000. In 2017, the Company recognized stock-based compensation expenses of $719,000 related to RSUs. As of December 31, 2017, total unrecognized stock-based compensation expenses related to unvested RSUs was $1.5 million, which is expected to be recognized on a straight-line basis over a weighted-average period of approximately 2.35 years.

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 January 1, 2016	2,832,467		$	11.48
Granted	991,110		$	15.49
Exercised	(20,782	)	$	3.12
Forfeited	(182,605	)	$	19.01
Expired	(29,797	)	$	25.65
Outstanding at December 31, 2016	3,590,393		$	12.13	7.33	$	5,062
Granted	954,301		$	6.46
Exercised	(175,183	)	$	2.56
Forfeited	(117,124	)	$	14.35
Expired	(157,855	)	$	17.19
Outstanding at December 31, 2017	4,094,532		$	10.96	7.21	$	2,771
Vested and expected to vest after December 31, 2017	4,094,532		$	10.96	7.21	$	2,771
Exercisable at December 31, 2017	2,464,086		$	10.98	6.29	$	2,771

As of December 31, 2017, there was $10.8 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 2.1 years. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was $868,000, $124,000 and $5.0 million, respectively.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in our statements of operations is as follows (in thousands):



	YEARS ENDED DECEMBER 31,
	2017		2016		2015

Employee:
Research and development	$	3,613	$	3,923	$	2,034
General and administrative	4,879		5,029		3,810
Non-Employee:
Research and development	85		268		205
General and administrative	56		63		248
Total stock-based compensation expense	$	8,633	$	9,283	$	6,297

We use the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes option pricing model requires us to make certain estimates and assumptions, including assumptions related to the expected price volatility of our stock, the period during which the options will be outstanding, the rate of return on risk-free investments, and the expected dividend yield of our stock.

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



	YEARS ENDED DECEMBER 31,
	2017		2016		2015

Weighted-average estimated fair value	$	4.41	$	10.07	$	15.65
Risk-free interest rate (1)	1.9% - 2.2%		1.1% - 2.4%		1.5% - 1.9%
Expected term of options (in years) (2)	5.50 - 6.08		5.50 - 9.46		5.50 - 6.08
Expected stock price volatility (3)	80% - 91%		77% - 93%		77% - 91%
Expected dividend yield (4)	—%		—%		—%


(1)	The risk-free interest rate assumption was based on zero-coupon U.S. Treasury instruments that had terms consistent with the expected term of our stock option grants.


(2)	We used the “simplified method” for options to determine the expected term of our stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.


(3)	Volatility is a measure of the amount by which a financial variable, such as share price, has fluctuated or is expected to fluctuate during a period. We analyzed the stock price volatility of companies at a similar stage of development to estimate expected volatility of our stock price.


(4)	We have never declared or paid cash dividends and do not presently plan to pay cash dividends in the foreseeable future.