Stock-Based Compensation

The Company's board of directors (the “Board”) adopted the 2009 Equity Incentive Plan (as amended to date, the “Plan”) effective September 3, 2009. The Plan is intended to further align the interests of the Company and its stockholders with its employees, including its officers, non-employee directors, consultants and advisers by providing equity-based incentives. The Plan allows for the issuance of up to 5,600,000 shares of the Company’s common stock. In addition, there were 206,000 options issued outside of the Plan to consultants in prior years.

The types of awards that may be granted under the Plan include options (both non-qualified stock options and incentive stock options), stock appreciation rights, stock awards, stock units, and other stock-based awards. The term of each award is determined by the Compensation Committee of the Board at the time each award is granted, provided that the terms of options do not exceed ten years. Vesting schedules for stock options granted to employees vary, but generally vest 25% per year, over four years. The Plan had 2,426,659 options available for grant as of December 31, 2015.

The Company recognizes compensation cost for stock-based awards based on their grant date fair value. During the years ended December 31, 2015, 2014 and 2013, the weighted average fair market value using the Black-Scholes option-pricing model for the options granted was $3.59, $2.64 and $2.79, respectively. The fair market value of the stock options at the date of grant was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions for the years ended December 31:



	2015		2014		2013
Expected life (1)	6 years, 1 month		5 years, 11 months		5 years, 7 months
Interest rate	1.6	%	1.9	%	1.6	%
Dividend yield	—		—		—
Volatility (2)	103.2	%	70.0	%	71.0	%


(1)	The Company uses the simplified method for estimating the stock option term.


(2)	The Company uses historical volatility of a peer group for estimating expected volatility of the Company's shares.

Expected stock price volatility is based on historical volatility of the Company’s stock and the stock of the Company’s peer companies. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life for options granted represents the period of time that options granted are expected to be outstanding and is derived from the contractual terms of the options granted. The Company estimates future forfeitures of options based upon historical forfeiture rates.

Total stock-based compensation expense, net of estimated forfeitures, recognized using the straight-line attribution method in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013 was as follows:



($ in thousands)	2015		2014		2013
Research and development:
Stock-based compensation expense for employees	$	158	$	38	$	32
Equity awards for non-employees issued for services	—		3		4
Selling, general and administrative:
Stock-based compensation expense for employees and directors	1,880		1,198		1,013
Equity awards for non-employees issued for services	—		—		101
Total stock-based compensation expense	$	2,038	$	1,239	$	1,150



($ in thousands, except share and per share data)	Number of shares		Weighted- average exercise price		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value
Outstanding at December 31, 2012	562,025		$	18.56	7 years	$	—
Granted	1,532,000		4.15
Forfeited	(25,305	)	14.71
Outstanding at December 31, 2013	2,068,720		$	7.93	8 years, 5 months	$	544
Granted	348,000		4.19
Expired	(51,637	)	21.61
Forfeited	(278,633	)	4.45
Outstanding at December 31, 2014	2,086,450		$	7.43	7 years, 2 months	$	—
Granted	1,352,114		4.48
Exercised	(56,250	)	4.53
Expired	(65,250	)	10.54
Forfeited	(182,970	)	5.91
Outstanding at December 31, 2015	3,134,094		$	6.23	8 years	$	1,630
Vested and expected to vest at December 31, 2015	3,015,584		$	6.32	7 years, 11 months	$	1,556
Exercisable at December 31, 2015	1,479,939		$	8.47	7 years, 1 month	$	624

The total fair value of shares vested during the years ended December 31, 2015, 2014 and 2013 was $1.5 million, $1.2 million, and $1.2 million, respectively.

During the year ended December 31, 2015, a total of 56,250 stock options with a total intrinsic value of approximately $0.04 million were exercised resulting in proceeds of approximately $0.3 million. There were no exercises of vested stock options during the years ended 2014 or 2013.

As of December 31, 2015, there was $4.1 million of total unrecognized compensation cost related to nonvested stock options which vest over time. That cost is expected to be recognized over a weighted average period of 2.7 years. As of December 31, 2015, there were 1,654,155 nonvested stock options with a weighted average exercise price of $4.23 and an average intrinsic value of $1.0 million.