Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

(7) Stock-Based Compensation

The Company maintains the Amended and Restated 2014 Omnibus Incentive Compensation Plan, as amended (“2014 Plan”), which allows for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units, performance units and other stock-based awards to purchase an aggregate of 2,450,000 shares of the Company’s common stock to employees, officers, directors, consultants, and advisors, subject to automatic annual increases in the number of shares authorized for issuance under the 2014 Plan on the first trading day of January each year, commencing on January 1, 2017, equal to the lesser of 1.5 million shares and 10% of the number of shares of common stock outstanding on the last trading day of December of the preceding year. In addition, the 2014 Plan provides selected executive employees with the opportunity to receive bonus awards that are considered qualified performance-based compensation. As of June 30, 2016 96,762 shares are available for issuance under the 2014 Plan.

Options issued under the 2014 Plan have a contractual life of 10 years and may be exercisable in cash or as otherwise determined by the board of directors. The Company has granted options to employees and non-employee directors.

During the six months ended June 30, 2016, the Company recorded stock-based compensation expense related to its stock option grants and restricted stock awards, as follows:


	Research and Development		General and Administrative		Total
Stock option grants	$	558,922	$	897,696	$	1,456,618
Restricted stock awards		64,729		55,191		119,920
	$	623,651	$	952,887	$	1,576,538

Vesting of the stock option grants and restricted stock awards issued prior to the Company’s IPO in August 2015 was contingent upon the closing of the Company’s IPO. Accordingly, prior to the Company’s IPO in August 2015, no expense had been recorded for the stock option grants and restricted stock awards.

The following table summarizes the stock option activity under the 2014 Plan for the six-month period ended June 30, 2016:


		Weighted
		Average		Weighted
		Grant Date		Average
	Options	Fair Value		Exercise Price
Outstanding as of December 31, 2015	1,637,399	$	6.47	$	10.49
Granted	120,000	$	5.50	$	8.35
Outstanding as of June 30, 2016	1,757,399	$	6.40	$	10.34

During the three months ended June 30, 2016, the Company granted a total of 120,000 stock options to non-management members of the Company’s Board of Directors and a new employee. The stock options granted to the non-management directors vest on the earlier of the one-year anniversary of the grant date, or the date of the Company’s 2017 annual stockholders’ meeting. The stock options granted to the Company’s new employee vest 25% upon the first anniversary of the grant date and quarterly over three years thereafter.

The weighted average grant date fair value of stock options granted during the three months ended June 30, 2016 was estimated using the Black-Scholes option pricing model with the following ranges of assumptions: expected volatility of 77%, risk free interest rate of 1.43% to 1.62%, expected term of 5.5 years to 6.25 years and 0% expected dividend yield.

As of June 30, 2016, there was $8.5 million of unrecognized stock-based compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.81 years. As of June 30, 2016, 415,029 stock options with a weighted average grant date fair value of $3.98 were exercisable, and the Company expects an additional 1,342,370 stock options to vest.

The following table summarizes the restricted stock award activity under the 2014 Plan for the six-month period ended June 30, 2016:


		Weighted
		Average
		Grant Date
	Shares	Fair Value
Unvested as of December 31, 2015	398,671	$	1.65
Vested	(72,486)	$	1.65
Unvested as of June 30, 2016	326,185	$	1.65

As of June 30, 2016, there was $0.5 million of unrecognized stock-based compensation expense related to unvested restricted stock awards as of June 30, 2016, which is expected to be recognized over a weighted-average period of 2.09 years. The Company expects all 326,185 unvested restricted stock awards to vest.