The Company’s 2006 Stock Option Plan (“2006 Plan”) was established for granting stock incentive awards to directors, officers, employees and consultants of the Company. Upon closing of the Company’s IPO in August 2014, the Company ceased granting stock incentive awards under the 2006 Plan. The 2006 Plan provided for the grant of incentive and non-qualified stock options and restricted stock grants as determined by the Company’s board of directors. Under the 2006 Plan, stock options were generally granted with exercise prices equal to or greater than the fair value of the common stock as determined by the board of directors, expired no later than 10 years from the date of grant, and vested over various periods not exceeding 4 years.

The Company’s 2014 Incentive Award Plan (“2014 Plan”, and together with the 2006 Plan, the “Stock Incentive Plans”) provides for the issuance of shares of common stock in the form of stock options, awards of restricted stock, awards of restricted stock units, performance awards, dividend equivalent awards, stock payment awards and stock appreciation rights to directors, officers, employees and consultants of the Company. Since the establishment of the 2014 Plan, the Company has primarily granted stock options and restricted stock units. Generally, stock options are granted with exercise prices equal to or greater than the fair value of the common stock on the date of grant, expire no later than 10 years from the date of grant, and vest over various periods not exceeding 4 years.

The number of shares reserved for future issuance under the 2014 Plan is the sum of (1) 16,470 shares, (2) any shares that were granted under the 2006 Plan which are forfeited, lapse unexercised or are settled in cash subsequent to the effective date of the 2014 Plan and (3) an annual increase on the first day of each calendar year beginning January 1, 2015 and ending on January 1, 2026, equal to the lesser of (A) 4% of the shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (B) such smaller number of shares determined by the Company’s board of directors; provided, however, no more than 700,000 shares may be issued upon the exercise of incentive stock options. As of September 30, 2022, there were 52,676 shares available for future grant under the 2014 Plan.

The Company’s Amended and Restated Inducement Award Plan (“Inducement Plan”), which was adopted in March 2018 and most recently amended and restated in January 2020, provides for the grant of equity awards to new employees, including options, restricted stock awards, restricted stock units, performance awards, dividend equivalent awards, stock payment awards and stock appreciation rights. The aggregate number of shares of common stock which may be issued or transferred pursuant to awards under the Inducement Plan is 192,500 shares. Any awards that forfeit, expire, lapse, or are settled for cash without the delivery of shares to the holder are available for the grant of an award under the Inducement Plan. Any shares repurchased by or surrendered to the Company that are returned shall be available for the grant of an award under the Inducement Plan. The payment of dividend equivalents in cash in conjunction with any outstanding award shall not be counted against the shares available for issuance under the Inducement Plan. As of September 30, 2022, there were 84,501 shares available for future grant under the Inducement Plan.

During the nine months ended September 30, 2022 and 2021, the Company granted stock options with an aggregate fair value of $0.6 million and $1.1 million, respectively, which are being amortized into compensation expense over the vesting period of the options as the services are being provided.

The following is a summary of option activity under the Stock Incentive Plans and Inducement Plan (in thousands, except share and per share amounts):

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (In years)		Aggregate Intrinsic Value
Outstanding at December 31, 2021		197,171		$	143.96		7.09	$	51
Granted		33,520			21.50
Exercised		—			—		—		—
Forfeited		(25,608	)		42.64
Cancelled		(11,863	)		119.60
Outstanding at September 30, 2022		193,220		$	137.64		6.78	$	—
Exercisable at September 30, 2022		127,461		$	186.38		5.90	$	—
Vested or expected to vest at September 30, 2022		182,864		$	143.27		6.66	$	—

There were no options exercised in the nine months ended September 30, 2022 and 1,566 options exercised in the nine months ended September 30, 2021. The weighted-average grant date fair values of stock options granted in the nine month periods ended September 30, 2022 and 2021 were $17.58 per share and $54.77 per share, respectively, and were calculated using the following estimated assumptions:

	Nine Months Ended
	September 30,
	2022			2021
Weighted-average risk-free interest rate		2.27	%		0.92	%
Expected dividend yield		—	%		—	%
Expected volatility		106	%		104	%
Expected terms	6.0 years			6.0 years

The total fair values of options that vested during the nine months ended September 30, 2022 and 2021 were $1.4 million and $2.1 million, respectively.

As of September 30, 2022, there was $2.1 million of total unrecognized compensation cost related to non-vested stock options granted under the Stock Incentive Plans and Inducement Plan. Total unrecognized compensation cost will be adjusted for future changes in the estimated forfeiture rate. The Company expects to recognize that cost over a remaining weighted-average period of 2.1 years as of September 30, 2022.

During the nine months ended September 30, 2022, the Company awarded restricted stock units to certain employees and directors at no cost to them. The restricted stock units, excluding any restricted stock units with market conditions, vest through the passage of time, assuming continued service. Restricted stock units are not included in issued and outstanding common stock until the underlying shares are vested and released. The fair value of the restricted stock units, at the time of the grant, is expensed on a straight line basis. The granted restricted stock units had an aggregate fair value of $3.7 million, which are being amortized into compensation expense over the vesting period of the restricted stock units as the services are being provided.

The following is a summary of restricted stock unit activity under the 2014 Plan:

	Number of Shares			Weighted-Average Grant Date Fair Value Per Share
Nonvested at December 31, 2021		142,434		$	91.77
Granted		160,575			22.79
Vested		(50,352	)		93.13
Forfeited		(28,355	)		42.40
Nonvested at September 30, 2022		224,302		$	48.32

As of September 30, 2022, there was $8.5 million of total unrecognized compensation cost related to nonvested restricted stock units granted. Total unrecognized compensation cost will be adjusted for future changes in the estimated forfeiture rate. The Company expects to recognize that cost over a remaining weighted-average period of 1.7 years, as of September 30, 2022.

Under the 2014 Employee Stock Purchase Plan (the “2014 ESPP”) participants may purchase the Company’s common stock during semi-annual offering periods at 85% of the lower of (i) the market value per share of common stock on the first day of the offering period or (ii) the market value per share of the common stock on the purchase date. Each participant can purchase up to a maximum of $25,000 per calendar year in fair market value as calculated in accordance with applicable tax rules. The first offering period began on August 7, 2014. Stock-based compensation expense from the 2014 ESPP for the three months ended September 30, 2022 and 2021 was approximately $0.1 million. Stock-based compensation expense from the 2014 ESPP for the nine months ended September 30, 2022 and 2021 was approximately $0.3 million and $0.3 million, respectively.

The 2014 ESPP, which was amended and restated effective August 6, 2020, provides for the issuance of up to 90,478 shares of the Company’s common stock to eligible employees. At September 30, 2022, there were 29,181 shares available for issuance under the 2014 ESPP.

The following table summarizes the stock-based compensation expense resulting from awards granted under Stock Incentive Plans, the Inducement Plan and the 2014 ESPP, that was recorded in the Company’s results of operations for the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of product revenue	$	64	$	40	$	309	$	211
Research and development		230		269		851		707
Selling, general and administrative		1,060		2,114		4,280		4,655
Total stock-based compensation expense	$	1,354	$	2,423	$	5,440	$	5,573

For the three and nine months ended September 30, 2022 and 2021, stock-based compensation expenses capitalized as part of inventory or T2Dx instruments and components were immaterial.

In July 2021, a previous director of the Company resigned. In conjunction with his resignation, all of the director’s outstanding options vested in full and the exercise term was extended to the final expiration date for each respective outstanding option. Additionally, the non-vested restricted stock units granted to the director in June 2021 vested in full upon his resignation. These were accounted for as Type I equity modifications for the accelerated vesting and Type III equity modifications for the extended exercise period and resulted in an increase of $0.8 million to stock-based compensation expense for the three and nine months ended September 30, 2021. Included within selling, general and administrative above for the three and nine months ended September 30, 2021 is $0.6 million and $0.2 million related to the Type I modification and the Type III modification, respectively, from the director’s resignation.