8. Equity Incentive Plans

Equity Incentive Plans

In September 2012, the Company adopted the 2012 Equity Incentive Plan, as amended (the “Plan”), which provides designated employees of the Company and its affiliates, certain consultants and advisors who perform services for the Company and its affiliates, and nonemployee members of the board of directors of the Company and its affiliates with the opportunity to receive grants of incentive stock options, nonqualified stock options and stock awards.

On January 20, 2017, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). Beginning on January 1, 2018, the number of shares of common stock authorized for issuance pursuant to the 2016 Plan was increased each January 1 by an amount equal to four percent (4%) of the Company’s outstanding common stock as of the end of the immediately preceding calendar year or such other amount as determined by the compensation committee of the Company’s board of directors. In 2019, the board of directors and the stockholders approved and authorized an additional 3,000,000 shares of common stock to be added to the shares authorized for issuance under the 2016 Plan.

As of September 30, 2020, there were 455,144 shares available for grant under the Company’s equity incentive plans.

A summary of stock option activity under the Equity Plans is as follows:


		Weighted
		Average		Weighted		Aggregate
		Exercise Price		Average Remaining		Intrinsic
	Options	Per Share		Life in Years		Value
Outstanding at December 31, 2019	4,024,566	$	7.48	7.98	$	2
Granted	2,547,500	$	2.12
Exercised	(32,778)	$	1.53
Forfeited	(260,435)	$	6.95
Outstanding at September 30, 2020	6,278,853	$	5.35	8.18	$	1,082
Options exercisable at September 30, 2020	3,113,663	$	8.45	7.12	$	359
Options vested and expected to vest at September 30, 2020	6,278,853	$	5.35	8.18	$	1,082

The grant date fair value of the options granted during the year ended December 31, 2019 and the nine months ended September 30, 2020, was estimated at the date of grant using the Black-Scholes option valuation model. The expected life was estimated using the “simplified” method as defined by the SEC's Staff Accounting Bulletin 107, Share-Based Payment. The expected volatility was based on the historical volatility of comparable public companies from a representative peer group selected based on industry and market capitalization data. The risk-free interest rate was based on the continuous rates provided by the U.S. Treasury with a term approximating the expected life of the option. The expected dividend yield was 0% because the Company does not expect to pay any dividends for the foreseeable future. The Company elected the straight-line attribution method in recognizing the grant date fair value of options issued over the requisite service periods of the awards, which are generally the vesting periods.

The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors during the year ended December 31, 2019 and the nine months ended September 30, 2020 were as follows, presented on a weighted average basis:


	Nine Months		Year Ended
	Ended September 30,		December 31,
	2020		2019
Expected volatility	66.94	%		66.94	%
Weighted average risk-free interest rate	0.66	%		2.07	%
Expected dividend yield	0.00	%		0.00	%
Expected term (in years)	6.85			6.77

Stock options generally vest over a three or four year period, as determined by the compensation committee of the board of directors at the time of grant. The options expire ten years from the grant date. As of September 30, 2020, there was approximately $4,453 of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a remaining weighted-average period of approximately 2.21 years.

The Company recognized stock-based compensation expense related to the issuance of stock option awards to employees and non-employees in the condensed consolidated statements of operations as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	282	$	181	$	720	$	536
General and administrative		309		769		967		2,260
Total	$	591	$	950	$	1,687	$	2,796

Restricted Stock Units

During the nine months ended September 30, 2020 and 2019, the Company issued 92,500 and 181,000 restricted stock units ("RSUs"), respectively, to employees under the 2016 Plan. Upon vesting of the RSUs, the Company has the option to settle the award by either issuing shares of the Company's common stock or paying an amount of cash equal to the fair value of the Company's common stock on the settlement date. In each of October 2019 and January 2020, the Company cash settled 90,500 RSUs. As of September 30, 2020 and December 31, 2019, these RSUs are classified as restricted stock liability in the condensed consolidated balance sheets of $66 and $159, respectively, as they contain a cash settlement option.

During the nine months ended September 30, 2020, the Company granted 660,606 RSUs to an executive officer that will cliff vest and will be settled after three years of continuous service, or upon a change of control of the Company, whichever is earlier, pursuant to the 2016 Plan. During the nine months ended September 30, 2020, the Company recognized $170 of stock based compensation expense related to equity classified RSUs, as they do not contain a cash settlement option.

The following table presents a summary of outstanding RSUs under the 2016 Plan as of September 30, 2020:


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Outstanding at December 31, 2019	90,500	$	1.74
Awarded	753,106	$	1.49
Settled in cash	(90,500)	$	1.74
Outstanding at June 30, 2020	753,106	$	1.49

As of September 30, 2020, there were 753,106 shares outstanding covered by RSUs that are expected to vest. The weighted average grant date fair value of these shares of restricted stock was $1.49 per share and the aggregate grant date fair value of these shares of restricted stock was approximately $1,112. As of September 30, 2020, there was approximately $884 of unrecognized compensation costs related to RSUs granted to employees, which are expected to be recognized as expense over a remaining weighted average period of 2.17 years.