Stock-based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-based Compensation

Note 11 - Stock-based Compensation

On June 12, 2018, the Company's stockholders approved the 2018 Equity Incentive Plan (the "2018 Plan") to replace the Company's 2015 Equity Incentive Plan (the "2015 Plan"). As of June 30, 2020, the 2018 Plan authorizes the issuance of 50,000 shares of our common stock. In addition, up to 122,279 shares of our common stock reserved for issuance under the 2015 Plan became available for issuance under the 2018 Plan to the extent such shares were available for issuance under the 2015 Plan as of June 12, 2018 or cease to be subject to awards outstanding under the 2015 Plan, such as by expiration, cancellation, or forfeiture of such awards.

Stock options are generally issued with a per share exercise price equal to no less than fair market value of our common stock at the date of grant. Options granted under the 2018 Plan generally vest immediately, or ratably over a two- to 36-month period coinciding with their respective service periods. Options under the 2018 Plan generally have a term of five years. Certain stock option awards provide for accelerated vesting upon a change in control.

As of June 30, 2020, the Company had 6,757 shares of common stock available for issuance under the 2018 Plan. Subsequently, on July 8, 2020, the Company's stockholders approved an amendment to the 2018 Plan to increase the number of shares of common stock available for issuance under the 2018 Plan by 800,000 shares.

The Company measures the fair value of stock options with service-based and performance-based vesting criteria to employees, directors and consultants on the date of grant using the Black-Scholes option pricing model. The Black-Scholes valuation model requires the Company to make certain estimates and assumptions, including assumptions related to the expected price volatility of the Company's stock, the period under which the options will be outstanding, the rate of return on risk-free investments, and the expected dividend yield for the Company's stock.

The weighted-average assumptions used in the Black-Scholes option-pricing model used to calculate the fair value of options granted during the six months ended June 30, 2020 were as follows:

	Employee			Non-Employee
Expected volatility		88.1	%		N/A
Expected dividend yield		—			N/A
Expected term (in years)		5			N/A
Risk-free interest rate		0.26	%		N/A

The weighted average grant date fair value of options granted during the six months ended June 30, 2020 was $1.65 per share, as per the table below.

Due to the Company's limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined based on historical volatilities from traded options of biotech companies of comparable size and stability, whose share prices are publicly available. The expected term of options granted to employees is calculated based on the mid-point between the vesting date and the end of the contractual term according to the simplified method as described in SEC Staff Accounting Bulletin 110 because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its awards have been outstanding. For non-employee options, the expected term of options granted is the contractual term of the options. The risk-free interest rate is determined by reference to the implied yields of U.S. Treasury securities with a remaining term equal to the expected term assumed at the time of grant. The expected dividend assumption is based on the Company's history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.

The following table summarizes the stock option activity, for both equity plans, for the periods indicated as follows: 

	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (1)
Outstanding at December 31, 2019		136,489		$	28.00		3.9	$	—
Granted		25,000		$	2.44		4.8	$	—
Exercised		—		$	—		—	$	—
Forfeited		(6,000	)	$	—		—	$	—
Expired		—		$	—		—	$	—
Outstanding at June 30, 2020		155,489		$	24.83		3.9	$	—
Exercisable at June 30, 2020		99,573		$	28.22		2.5	$	—

(1) The aggregate intrinsic value in the table was calculated based on the difference between the estimated fair market value of the Company's stock and the exercise price of the underlying options. The estimated stock values used in the calculation were $2.00 and $11.00 per share for the six months ended June 30, 2020 and the year ended December 31, 2019, respectively.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the six months ended June 30, 2020:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2019		5,877		$	30.28
Granted		—		$	—
Vested		(4,543	)	$	1.42
Forfeited		—		$	—
Outstanding as of June 30, 2020		1,334		$	1.80

The stock-based compensation expense was recorded as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development	$	2	$	1	$	5	$	10
General and administrative		138		218		286		461
Total stock-based compensation expense	$	140	$	219	$	291	$	471

The allocation between research and development and selling, general and administrative expense was based on the department and services performed by the employee or non-employee.

At June 30, 2020, the total compensation cost related to restricted stock units and unvested options not yet recognized was $719, which will be recognized over a weighted average period of 33 months, assuming the employees and non-employees complete their service period required for vesting.