9. Stock options

Stock option plans

In June 2017 the Company’s shareholders approved the 2017 Stock Incentive Plan (the 2017 Plan). Under the 2017 Plan, up to 2,255,000 shares of common stock may be granted to the Company's employees, officers, directors, consultants and advisors in the form of options, restricted stock awards or other stock-based awards. The 2017 Plan provides that the number of shares of common stock issuable under the 2017 Plan shall be increased annually by 4% of the outstanding shares or such lesser amount specified by the Board. The terms of the awards are determined by the Board, subject to the provisions of the 2017 Plan. As of the adoption date of the 2017 Plan, there were 3,141,625 options outstanding under the Company’s 2007 Stock Incentive Plan (the 2007 Plan) (the 2007 Plan and the 2017 Plan collectively are referred to as the Plans). Any cancellations under the 2007 Plan would increase the number of shares that could be granted under the 2017 Plan. In January 2019, the number of shares of common stock issuable under the Plan was increased by 929,378 shares. As of September 30, 2019, there were 1,983,432 shares available for future issuance under the 2017 Plan.

With respect to incentive stock options, the option price per share will equal the fair market value of the common stock on the date of grant, which is generally the closing price for a share of the Company’s common stock on the Nasdaq Global Select Market on such date, and the vesting period is generally four years. Nonqualified stock options will be granted at an exercise price established by the Board at its sole discretion (which has not been less than fair market value on the date of grant) and the vesting periods may vary. Options granted under the 2017 Plan expire no later than 10 years from the date of grant. The Board may accelerate vesting or extend the expiration of granted options in the case of a merger, consolidation, dissolution, or liquidation of the Company.

Stock option activity

A summary of the activity under the Plans is as follows:


		Weighted-
	Number	Average
	of Shares	Exercise Price

Options outstanding at January 1, 2019	3,746,567	$	6.58
Granted	1,630,283		3.74
Exercised	(58,964)		2.04
Cancelled	(599,289)		9.42
Options outstanding at September 30, 2019	4,718,597	$	5.29

Options exercisable at September 30, 2019	2,531,612	$	4.36

The weighted-average grant date fair value of options granted during the nine months ended September 30, 2019 and 2018, was $2.47 and $9.45 per share, respectively.

Cash received from the exercise of stock options was $121 and $853 for the nine months ended September 30, 2019 and 2018, respectively.

Restricted stock units

In July 2019, the Company issued 449,331 restricted stock units with service conditions to employees, of which 447,366 are outstanding as of September 30, 2019. Vesting of these awards is contingent on the fulfillment of the service conditions. The weighted-average grant date fair value of restricted stock units was $4.00 per share. The Company recognized $184 of expense related to these awards in the third quarter of 2019 and will continue to recognize stock-based compensation expense related to these awards through July 2021 when the awards vest.

Stock-based compensation expense

The measurement date for employee awards is generally the date of grant. Stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period, using the straight-line method.

The following table presents stock-based compensation expense by award type included within the Company’s condensed consolidated statement of operations and comprehensive loss:


	Three months ended				Nine months ended
	September 30,				September 30,
		2019		2018		2019		2018
Stock options	$	1,055	$	988	$	3,240	$	2,692
Restricted stock units		184		—		184		—
Employee stock purchase plan		46		65		186		65
Stock-based compensation expense included in Total operating expenses	$	1,285	$	1,053	$	3,610	$	2,757

The following table presents stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss:


	Three months ended				Nine months ended
	September 30,				September 30,
		2019		2018		2019		2018
Research and development	$	587	$	495	$	1,636	$	1,302
General and administrative		698		558		1,974		1,455
Stock-based compensation expense included in Total operating expenses	$	1,285	$	1,053	$	3,610	$	2,757

The Company had an aggregate of $8,290 of unrecognized stock compensation cost as of September 30, 2019 remaining to be amortized over the weighted-average period of 2.2 years. As of September 30, 2019, the Company had $1,605 of unrecognized stock-based compensation expense related to restricted stock units. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:


	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Risk-free interest rate	1.9	%	2.9	%	2.4	%	2.7	%
Expected dividend yield	—	%	—	%	—	%	—	%
Expected term (years)	6.11		5.85		5.99		6.06
Expected stock price volatility	75	%	73	%	74	%	73	%

Employee Stock Purchase Plan

During the year ended December 31, 2017, the Board adopted, and the Company’s stockholders approved the 2017 employee stock purchase plan (the 2017 ESPP). The Company initially reserved 225,000 shares of common stock for issuance under the 2017 ESPP. In January 2019, the number of shares of common stock for issuance under the 2017 ESPP was increased by 232,344 shares. The Company did not issue any shares under the 2017 ESPP during the three months ended September 30, 2019. During the nine months ended September 30, 2019, the Company issued 82,281 shares under the 2017 ESPP. The Company did not issue any shares under the 2017 ESPP during the three and nine months ended September 30, 2018 As of September 30, 2019, there were 332,877 shares available for issuance under the 2017 ESPP.