Note 9: Stock Option Plan

2008 Stock Plan

During 2008, the Company adopted the 2008 Stock Plan (the “2008 Plan”). As amended, a total of 1,416,666 shares of common stock were reserved for issuance under the 2008 Plan. As of September 20, 2016, immediately prior to the IPO, 222,061 shares were available for future stock option grants. Eligible plan participants include employees, directors, and consultants. The 2008 Plan permitted the granting of incentive stock options, nonqualified stock options, and other stock-based awards. As further described below, as of September 20, 2016, no additional awards will be granted under the 2008 Plan.

2016 Stock Plan

Effective September 20, 2016 (the “Effective Date”), the Company adopted the 2016 Incentive Award Plan (the “2016 Plan”). The 2016 Plan is the successor to the 2008 Plan. As of the Effective Date, no additional awards will be granted under the 2008 Plan, but all stock awards granted under the 2008 Plan prior to the Effective Date will remain subject to the terms of the 2008 Plan. Any shares associated with stock awards previously granted under the 2008 Plan that are forfeited subsequent to the Effective Date of the 2016 Plan are not eligible for future issuance under the 2016 Plan. All awards granted on and after the Effective Date will be subject to the terms of the 2016 Plan. The 2016 Plan provides for the grant of the following awards: (i) incentive stock options, (ii) nonstatutory stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards and (vi) other stock awards. Eligible plan participants include employees, directors, and consultants. An aggregate of 833,333 shares of the Company’s common stock were initially available for issuance under awards granted pursuant to the 2016 Plan, which shares may be authorized but unissued shares, treasury shares, or shares purchased in the open market.

Under both the 2008 Plan and the 2016 Plan, options to purchase the Company’s common stock may be granted at a price no less than the fair value of a common stock share on the date of grant. The fair value shall be the closing sales price for a share as quoted on any established securities exchange for such grant date or the last preceding date for which such quotation exists. Vesting terms of options issued are determined by the board of directors or compensation committee of the board. The Company’s stock options vest based on terms in the stock option agreements, generally at a rate of one-third for each anniversary of the vesting commencement date for three years. Stock options have a maximum term of ten years.

As of December 31, 2016, there were a total of 615,207 shares of common stock available for future issuance under the 2016 Plan.

Stock Compensation Expense

In December 2015, the Board of Directors approved the acceleration of each option holder’s unvested options through the next annual anniversary of the grant’s vesting commencement date provided that the option holder consents to the option acceleration in writing. As of December 31, 2015, 159,159 options were vested pursuant to this option acceleration and the Company recognized $1,312 of additional compensation expense.

During the years ended December 31, 2016, 2015 and 2014, the Company recorded employee share-based compensation expense from continuing operations of $1,573, $1,974 and $168, respectively. The Company recorded non-employee share-based compensation expense from continuing operations of $0 during the years ended December 31, 2016 and 2015, and $9 during the year ended December 31, 2014. Total share-based compensation expense included in the consolidated statements of operations is as follows:

	Year Ended December 31,
	2016		2015		2014
Research and development	$	477	$	541	$	98
General and administrative		1,096		1,433		79
Discontinued operations		—		410		—
	$	1,573	$	2,384	$	177

The fair value of each option grant is estimated on the grant date using the Black-Scholes option-pricing model, using the following weighted average assumptions:

	Year Ended December 31,
	2016			2015			2014
Estimated dividend yield		0.00	%		0.00	%		0.00	%
Expected volatility		75.08	%	65.96-102.77%				102.77	%
Risk-free interest rate		1.32	%	1.48-1.81%				1.88	%
Expected life of options (in years)		5.72		5.1-5.9				6.00
Weighted-average fair value per share	$	11.47		$	6.83		$	6.59 - 7.06

Stock option activity for the periods indicated is as follows:

	Shares Available for Grant			Shares Subject to Outstanding Options			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding as of December 31, 2013		79,722			209,527		$	0.63
Additional shares reserved under plan		416,666			—
Options granted		(211,500	)		211,500			1.12
Options forfeited		17,083			(17,083	)		0.71
Options exercised		—			(67,431	)		0.70
Options outstanding as of December 31, 2014		301,971			336,513		$	0.91
Additional shares reserved under plan		416,666			—
Options granted		(366,909	)		366,909			8.80
Options forfeited		54,165			(54,165	)		3.70
Options exercised		—			(191,023	)		2.45
Options outstanding as of December 31, 2015		405,893			458,234		$	6.26
Additional shares reserved under plan		611,272			—
Options granted		(405,624	)		405,624			16.06
Options forfeited		3,666			(7,395	)		6.62
Options exercised		—			(31,333	)		1.11
Options outstanding as of December 31, 2016		615,207			825,130		$	11.27		8.54	$	12,994
Vested and expected to vest as of December 31, 2014					279,505		$	0.88		8.39	$	1,996
Exercisable as of December 31, 2014					92,833		$	0.54		6.44	$	694
Vested and expected to vest as of December 31, 2015					430,730		$	6.16		8.80	$	5,102
Exercisable as of December 31, 2015					232,827		$	4.27		8.38	$	3,196
Vested and expected to vest as of December 31, 2016					766,402		$	10.95		8.49	$	12,314
Exercisable as of December 31, 2016					303,162		$	7.32		7.53	$	5,974

The total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was $543, $1,655 and $513, respectively.

As of December 31, 2016, there was $4,896 of total unrecognized compensation expense related to non-vested share based compensation arrangements, which is expected to be recognized over a weighted average period of 1.99 years. As of December 31, 2015, there was $1,649 of total unrecognized compensation expense related to non-vested share based compensation arrangements, which is expected to be recognized over a weighted average period of 2.3 years.