11. Stock Incentive Plans

2013 Equity Incentive Plan

Effective November 1, 2013, the Company's board of directors and sole stockholder adopted the Jaguar Health, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). The 2013 Plan allows the Company's board of directors to grant stock options, restricted stock awards and restricted stock unit awards to employees, officers, directors and consultants of the Company. Following the effective date of the IPO and after effectiveness of any grants under the 2013 Plan that were contingent on the IPO, no additional stock awards will be granted under the 2013 Plan. Outstanding grants continue to be exercisable; however, any unissued shares under the plan and any forfeitures of outstanding options do not rollover to the 2014 Stock Incentive Plan. As of September 30, 2019, there were 368 options outstanding.

2014 Stock Incentive Plan

In May 2015, the Company adopted the Jaguar Health, Inc. 2014 Stock Incentive Plan (“2014 Plan”). The 2014 Plan provides for the grant of options, restricted stock and restricted stock units to eligible employees, directors and consultants to purchase the Company's common stock. The 2014 Plan provides for automatic share increases on the first day of each fiscal year in the amount of 2% of the outstanding number of shares of the Company's common stock on the last day of the preceding calendar year. The final 2% increase under the terms of the 2014 Plan was on January 1, 2019, at which time 7,797 additional available shares were added to the 2014 Plan. In February 2019, the Company shareholders approved a 5-year extension of the annual 2% automatic increase from January 1, 2020 through January 1, 2024. The 2014 Plan replaced the 2013 Plan except that all outstanding options under the 2013 Plan remain outstanding until exercised, cancelled or expiration.

In July 2019, the Company adopted an amendment to the 2014 Plan to increase the number of shares of the Company’s common stock authorized for issuance such that the aggregate authorized but unissued shares available for issuance would be equal to 12.5% of the issued and outstanding shares of Common Stock on a fully diluted basis including for purposes of this calculation as if such shares available under the 2014 Plan were included in the denominator (and assuming conversion or exercise, as applicable, of all outstanding convertible securities, including but not limited to conversion of the Company’s Series A Convertible Participating Preferred Stock and Series B Convertible Preferred Stock into shares of Common Stock, all issued and outstanding warrants, RSUs and stock options (whether issued under or outside the 2014 Plan and the like)), calculated as of the earlier of (i) the day immediately after the consummation of the Company’s next underwritten public equity offering with gross proceeds of $5 million or more or (ii) July 31, 2019 (collectively, the “Calculation Date”). The Calculation Date occurred on July 24, 2019 and the total number of shares of Common Stock approved for issuance under the 2014 Plan increased 4,330,400 shares.

As of September 30, 2019, there were 3,821,690 options outstanding and 554,016 options available for grant.

Stock Options and Restricted Stock Units (“RSUs”)

The following table summarizes incentive plan activity for the nine months ended September 30, 2019 (unaudited):


				Weighted		Weighted Average
	Shares	Stock		Average		Remaining	Aggregate
	Available	Options	RSUs	Stock Option		Contractual Life	Intrinsic
	for Grant	Outstanding	Outstanding	Exercise Price		(Years)	Value*
Outstanding at December 31, 2018	2,327	42,979	5,613	$	406.36	9.24	$	—
Additional shares authorized	4,330,400	—	—		—	—
Options granted	(4,306,832)	4,306,832	—		1.71	—		—
Options cancelled	528,121	(528,121)	—		4.45	—		—
Outstanding at September 30, 2019	554,016	3,821,690	5,613	$	5.72	9.81	$	—
Exercisable at September 30, 2019		503,943		$	24.61	9.76	$	—
Vested and expected to vest at September 30, 2019		3,197,953		$	6.82	9.81	$	—

*Fair market value of JAGX common stock on September 30, 2019 was $1.31 per share.

The intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of the Company's common stock for options that were in-the-money.

No options were exercised in the nine months ended September 30, 2019 and 2018.

The weighted average grant date fair value of stock options granted was $1.57 and $128.80 per share during the nine months ended September 30, 2019 and 2018, respectively.

The number of options that vested in the nine months ended September 30, 2019 and 2018 was 496,467 and 6,053, respectively. The grant date weighted average fair value of options that vested in the nine months ended September 30, 2019 and 2018 was $2,668,737 and $475,123, respectively.

The Company granted 2,993 inducement options in fiscal year 2018 to new employees. The weighted average grant-date fair value of the options was $93.80 per share.

Stock-Based Compensation

The following table summarizes stock-based compensation expense related to stock options, inducement stock options and RSUs for the three and nine months ended September 30, 2019 and 2018, and are included in the condensed consolidated statements of operations as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Research and development expense	$	332,636	$	175,772	$	548,524	$	400,521
Sales and marketing expense		41,122		39,210		87,215		59,762
General and administrative expense		736,351		465,112		1,347,246		956,508
Total	$	1,110,109	$	680,094	$	1,982,985	$	1,416,791

As of September 30, 2019, the Company had $5,555,383 of unrecognized stock-based compensation expense for options, inducement options and restricted stock units outstanding, which is expected to be recognized over a weighted-average period of 2.31 years.

The estimated grant-date fair value of stock option grants for the nine months ended September 30, 2019 and 2018 was calculated using the Black-Scholes - Merton option-pricing model using the following weighted-average assumptions:


	Nine Months Ended
	September 30,
	2019		2018
	(unaudited)
Weighted-average volatility	142.9 - 145.9	%	95.6 - 95.9	%
Weighted-average expected term (years)	5.6 - 5.8		5.8
Risk-free interest rate	1.5 - 1.9	%	2.8 - 3.1	%
Expected dividend yield	—		—

401(k) Plan

The Company sponsors a 401(k) defined contribution plan covering all employees. There were no employer contributions to the plan from plan inception through September 30, 2019.