Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Stock-Based Compensation

Stock-Based Compensation

(12) Stock-Based Compensation 

The Company recognizes all stock-based payments to employees and directors as expense in the statements of operations and comprehensive loss based on their fair values. The Company records compensation expense over an award’s requisite service period, or vesting period, based on the award’s fair value at the date of grant. The Company’s policy is to charge the fair value of stock options as an expense, adjusted for forfeitures, on a straight-line basis over the vesting period, which is generally four years for employees and three years for directors.

The Company recorded charges in Total operating expense of $1.8 million and $1.7 million in its statements of operations and comprehensive loss for the three months ended March 31, 2017 and 2016, respectively, for stock-based compensation expense attributable to stock-based payments made to employees and directors. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions apply to the options to purchase 3,422,000 and 2,733,750 shares of common stock granted to employees and directors during the three months ended March 31, 2017 and 2016, respectively:

	Three Months Ended
	March 31,
	2017		2016
Average risk free interest rate		1.7%		1.5%
Expected dividend yield		—		—
Expected lives (years)		3.9		4.1
Expected volatility		86.9%		93.0%
Weighted average grant date fair value of options granted during the period (per share)	$	0.99	$	1.90
Weighted average exercise price of options granted during the period (per share)	$	1.59	$	2.86

The expected lives and the expected volatility of the options granted during the three months ended March 31, 2017 and 2016 are based on historical experience. All options granted during the three months ended March 31, 2017 and 2016 were granted at exercise prices equal to the fair market value of the common stock on the dates of grant.