8. Stock-Based Compensation

Stock Incentive Plans

The Company has two equity incentive plans: the 2006 Stock Plan (“2006 Plan”) and the 2015 Omnibus Equity Incentive Plan (“2015 Plan”).

In 2006, the Company adopted the 2006 Plan, which provided for the granting of stock options to executives, employees, and other service providers under terms and provisions established by the Board of Directors. The Company granted options under the 2006 Plan until May 2015, when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2006 Plan. Certain options vested upon completion of the IPO and the remaining unvested options vest over original service periods between two-and-a-quarter and four years. The 2015 Plan became effective upon the IPO in May 2015 and all shares that were reserved, but not issued, under the 2006 Plan were assumed by the 2015 Plan. Upon effectiveness, the 2015 Plan had 3,087,729 shares of common stock reserved for future issuance, which included 212,729 shares under the 2006 Plan that were transferred to and assumed by the 2015 Plan. The 2015 Plan provides for automatic annual increases in shares available for grant, beginning on January 1, 2016. In addition, shares subject to awards under the 2006 Plan that are forfeited or canceled will be added to the 2015 Plan. The 2015 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted stock awards, stock units, stock appreciation rights, and other forms of equity compensation, all of which may be granted to employees, officers, non-employee directors, and consultants. The ISOs and NSOs will be granted at a price per share not less than the fair value at date of grant. Options granted generally vest over a four-year period, with 25% vesting at the end of one year and the remaining vesting monthly thereafter. Options granted, once vested, generally are exercisable for up to 10 years after grant.

As of June 30, 2016, a total of 5,036,426 shares of common stock were reserved for issuance under the 2015 Plan, of which 4,241,426 shares of common stock are available for future grant. As of June 30, 2016, a total of 2,973,293 and 795,000 options are outstanding under the 2006 and 2015 Plans, respectively.

A summary of activity under the stock incentive plans is as follows (in thousands, except share data and price per share):

	Shares Subject to Outstanding Options			Weighted- Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding — Balance at December 31, 2015		3,427,509		$	3.76	$	3,707
Options granted		750,000			6.36
Options exercised		(176,054	)		1.21
Options cancelled and forfeited		(233,162	)		5.39
Outstanding — Balance at June 30, 2016		3,768,293		$	4.30	$	2,500
Options vested and exercisable — June 30, 2016		2,848,655		$	3.58	$	2,252

As of June 30, 2016, there was $880,000 of unrecognized compensation cost related to unvested stock-based compensation grants that will be recognized over the weighted-average remaining recognition period of 2.87 years.

The fair value of stock option awards to executives, employees, and other service providers was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Expected term (years)	6.06 - 6.15			5.52	6.06 - 6.15			5.52
Expected volatility	88 - 90%			80%	88 - 90%		80% - 104%
Risk-free interest rate	1.52% - 1.54%			1.62%	1.52% - 1.54%		1.61% - 1.66%
Dividend yield		—		—		—		—

The weighted-average estimated grant-date fair value of stock options granted during the three and six months ended June 30, 2016 were $0.72 for both periods. The weighted-average estimated grant-date fair value of stock options granted during the three and six months ended June 30, 2015 was $5.35 and $1.28, respectively.

Employee Stock Purchase Plan

Concurrent with the effectiveness of the Company’s registration statement on Form S-1 on May 14, 2015, the Company’s 2015 Employee Stock Purchase Plan (“ESPP”) became effective. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. After the first offering period, which began on May 14, 2015 and ended on February 1, 2016, the ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period. As of June 30, 2016, the number of shares of common stock reserved for future issuance under the ESPP is 1,027,741. The ESPP provides for automatic annual increases in the shares available for purchase beginning on January 1, 2016. As of June 30, 2016, 34,759 shares had been issued under the ESPP. The Company recorded $26,000 and $56,000 of compensation expense for the three and six months ended June 30, 2016, respectively.