8. Stock Options

We adopted the 2007 Stock Incentive Plan ("the 2007 Plan") in November 2007, which terminated in accordance with its terms on November 28, 2017; however, the outstanding stock options may continue to be exercised in accordance with their terms.

Immediately following the termination of the 2007 Plan, we adopted the 2017 Stock Incentive Plan ("the 2017 Plan"), which contains substantially similar terms and conditions as the 2007 Plan. Upon the IPO, no further grants were made under the 2017 Plan and we adopted the 2018 Stock Incentive Plan ("the 2018 Plan"). The purpose of the 2018 Plan is to promote the interest of our company and our stockholders by aiding in attracting and retaining employees, officers, consultants, independent contractors, and directors capable of assuring the future success our business and to afford such persons an opportunity to acquire a proprietary interest our company. The Board may amend, alter, suspend, discontinue, or terminate the 2018 Plan at any time with the approval of our stockholders.

As of June 30, 2018, there were 1,386,809 shares reserved for issuance under the 2018 Plan, of which 1,066,392 shares were available for issuance. Prior to the IPO, the exercise price of stock options represented fair value of the common stock at the time of issuance and was determined by the Board of Directors. Post-IPO, options are granted at the exercise price, which is equal to the closing price of our stock on the date of grant. The options granted during the six months ended June 30, 2018 contain fixed exercise prices ranging from $2.80 to $35.66 per share with varying expiration and exercise dates and have a weighted average exercise price of $12.40 per share. The stock options granted to employees include a four-year service period and 25% vest after the first year of service and with the remainder vesting pro rata over the next 36 months of service. The stock options granted to the Board of Directors include a one-year service period and all shares vest after the one year of service. The stock options have a contractual life of ten years.

A summary of stock option activity and related information is as follows:


	Options			Weighted Average Exercise Price		Weighted average remaining contractual term (years)		Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2017		2,071,616		$	1.47		5.9
Granted		355,056			12.40
Exercised		(206,404	)		1.80
Forfeited		(24,935	)		1.03

Outstanding at June 30, 2018		2,195,333			3.20		7.0	$	71,342


Exercisable at June 30, 2018		1,272,700			1.61		5.5		43,342

Total stock-based compensation recognized, before taxes, during the three and six months ended June 30, 2018 and 2017, is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
General and administrative	$	238	$	24	$	266	$	48
Sales and marketing		26		21		47		43
Research and development		5		9		11		17

Total stock-based compensation	$	269	$	54	$	324	$	108

As of June 30, 2018, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2022 related to unvested employee and non-employee director share-based awards is $2.2 million and the weighted average period over which the unearned stock-based compensation is expected to be recognized is 2.7 years. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional share-based awards.

We estimate the fair value of share-based awards on the date of grant using the Black-Scholes option pricing model using the fair market value of our common stock on the date of grant and a number of other complex and subjective assumptions. These assumptions include, but are not limited to, estimates regarding the expected term of our outstanding awards, estimates of the stock volatility over a duration that approximates the expected life of our outstanding awards, estimates of the risk-free rate, and estimates of expected dividend rates.

Due to our limited amount of historical exercise, forfeiture, and expiration activity, we have opted to use the "simplified method" for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting terms and the original contractual term of the option. We will continue to analyze our expected term assumption as more historical data becomes available. Due to our limited operating history and a lack of company specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. When selecting these public companies on which we have based our expected stock price volatility, we generally selected companies with comparable characteristics to it, including enterprise value, stages of clinical development, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The historical volatility data was computed using the daily closing prices for the selected companies' shares over historical periods that approximate calculated expected term of our share-based awards. We will continue to analyze the historical stock price volatility assumption as more historical data for our common stock becomes available.

The risk-free rate assumption is based on the U.S. Treasury instruments with maturities similar to the expected term of our stock options.

The expected dividend assumption is based on our history of not paying dividends and our expectation that we will not declare dividends for the foreseeable future.

The amount of stock-based compensation expense recognized is based on awards ultimately expected to vest. The amount of expense recognized has been reduced by actual forfeitures as they occur.

The fair value of options granted to employees and non-employee directors during the six months ended June 30, 2018 and 2017 was estimated as of the grant date using the Black-Scholes option pricing model using the following assumptions:


	Six Months Ended June 30,
	2018	2017
Expected life (years)	5.50 - 6.25	5.75 - 6.25
Expected volatility	37.5 - 49.8%	40.6 - 41.5%
Risk-free interest rate	2.38 - 2.84%	1.88 - 2.32%
Dividend yield	0.0%	0.0%
Weighted average fair value	$6.10	$0.40