Stock-based compensation

10 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based compensation

Stock-based compensation

In March 2014, the Company adopted the Flex Pharma, Inc. 2014 Equity Incentive Plan (the "Plan"), under which it may grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to purchase up to 116,754 shares of common stock. In April 2014, the Company amended the Plan to reserve for the issuance of up to 1,451,087 shares of common stock pursuant to equity awards. In September 2014, the Company further amended the Plan to reserve for the issuance of up to 2,070,200 shares of common stock pursuant to equity awards. Terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the Plan. For options granted from February 26, 2014 (inception) to December 31, 2014, the exercise price equaled the fair market value of the common stock as determined by the board of directors on the date of grant. As of December 31, 2014, there were 262,482 shares remaining available for the grant of stock awards under the Plan.

For the period from February 26, 2014 (inception) to December 31, 2014, the Company granted a total of 137,765 stock options to non-employee consultants and members of its Scientific Advisory Board, which are included in the following table. The options generally vest over a four-year period, and have a contractual term of ten years. The total stock-based compensation expense related to all non-employee stock options for the period from February 26, 2014 (inception) to December 31, 2014 was approximately $149,000. The following table summarizes stock option activity for employees and non-employees:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Granted	1,020,234		$	3.19
Exercised	(13,572	)	0.60
Cancelled or forfeited	(79,830	)	1.14
Outstanding at December 31, 2014	926,832		$	3.40	9.67	$	6,846,054
Exercisable at December 31, 2014	3,891		$	0.60	9.29	$	39,649
Vested or expected to vest at December 31, 2014	867,333		$	3.39	9.66	$	6,421,021

During the period from February 26, 2014 (inception) to December 31, 2014, the Company granted stock options to purchase an aggregate of 1,020,234 shares of its common stock with a weighted-average grant date fair value of $2.20. There were 13,572 stock options exercised with a weighted-average exercise price of $0.60 during the period from February 26, 2014 (inception) to December 31, 2014. The intrinsic value of stock options exercised during the period from February 26, 2014 (inception) to December 31, 2014 was $51,719. The intrinsic value is calculated as the difference between the fair value of the Company's common stock and the exercise price of the options at the date of exercise.

The Company estimates the fair value of each stock option award on the grant date using the Black-Scholes option-pricing model based on the following assumptions and the assumptions regarding the fair value of the underlying Common Stock on each measurement date:

	Period from February 26, 2014 (Inception) to December 31, 2014
Expected volatility	75.8% to 76.4%
Risk-free interest rate	1.59% to 2.71%
Expected term	6 - 10 years
Expected dividend yield	0	%

Total stock-based compensation expense recognized for employee and non-employee restricted common stock, and stock options granted to employees and non-employees is included in the Company's statement of operations and comprehensive loss as follows:

	Period from February 26, 2014 (Inception) to December 31, 2014
Research and development	$	648,001
General and administrative	814,060
Total	$	1,462,061

As of December 31, 2014, there was approximately $12,632,000 of total unrecognized compensation cost related to non-vested equity awards. Total unrecognized compensation cost will be adjusted for the re-measurement of non-employee awards as well as future changes in employee and non-employee forfeitures, if any. The Company expects to recognize that cost over a remaining weighted-average period of 3.27 years.