EQUITY-BASED COMPENSATION

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Equity Incentive Plans

The Company has granted options to employees, directors, and consultants under the 2015 Equity Incentive Plan (the "2015 Plan"). On July 19, 2019, the Company completed a merger with Flex Pharma and Flex Pharma had fully vested options to purchase 90,279 common shares outstanding as of the date of the merger and 34,385 of these options continue to be exercisable as of March 31, 2021. The 2015 Plan provides for the grant of incentive stock options ("ISOs"), nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance-based stock awards and other stock-based awards. Additionally, the 2015 Plan provides for the grant of performance-based cash awards. ISOs may be granted only to the Company's employees. All other awards may be granted to the Company's employees, including officers, and to non-employee directors and consultants. As of March 31, 2021, there were 1,020,690 shares remaining available for the grant of stock awards under the 2015 Plan.

During the three-month periods ended March 31, 2021 and 2020, the Company awarded 40,000 and 182,000, respectively, stock options to its employees and directors, pursuant to the plan described above. Stock options generally vest over one to four years and have a contractual term of ten years. Stock options are valued using the Black-Scholes option pricing model and compensation cost is recognized based on the resulting value over the service period. Expected volatilities utilized in the model are based on implied volatilities from traded stocks of peer companies. Similarly, the dividend yield is based on historical experience and the estimate of future dividend yields. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The expected term of the options is based on the average period the stock options are expected to remain outstanding. The fair value of the option grants awarded during each of the three month periods ended March 31, 2021 and 2020 was $0.1 million, which has been estimated with the following assumptions on the grant date.


	3/23/2020		3/10/2021
Risk-free interest rate	0.48	%	1.00	%
Volatility	113.17	%	133.35	%
Expected life (years)	5.80		6.00
Expected dividend yield	0	%	0	%

The following table summarizes stock option activity for employees and non-employees for the three months ended March 31, 2021 and 2020:


	Shares	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2019	166,233	$34.42	6.53	$—
Granted	182,000	0.61
Exercised	—
Forfeited	(10,000)	—
Expired	—
Outstanding at March 31, 2020	338,233	$17.01	8.18
Exercisable at March 31, 2020	84,711	$59.85	3.23	$—

Outstanding at December 31, 2020	1,563,972	$2.44	4.87	$175,770
Granted	40,000	$1.49
Exercised	—
Forfeited	—
Expired	—
Outstanding at March 31, 2021	1,603,972	$2.75	9.24	$784,801
Exercisable at March 31, 2021	143,747	$18.96	7.00	$57,900

As of March 31, 2021 and 2020, there was approximately $1.3 million and $0.5 million of total unrecognized compensation cost related to unvested stock options. Total unrecognized compensation cost will be adjusted for future changes in employee and non-employee forfeitures, if any. The Company expects to recognize that cost over a remaining weighted-average period of 2.9 years.