Stock Purchase Warrants

The Company has historically issued warrants to purchase shares of the Company’s common stock in connection with certain of its common stock offerings and in September 2016 and December 2017 the Company issued warrants in connection with the amended SVB Loan Agreement discussed in note 6 (collectively the Debt Warrants) classified in equity. The warrants issued in August 2013 (August 2013 Warrants) expired in August 2018, and included anti-dilution price protection provisions that required cash settlement of the warrants and accordingly required the warrants to be recorded as liabilities of the Company at the estimated fair value at the balance sheet date, with changes in estimated fair value recorded as income or expense (non-cash) in the Company’s statement of operations in each subsequent period. The following table describes the outstanding warrants as of December 31, 2018:



		December 2017 Warrants
Exercise price		$4.27
Expiration date		December 6, 2023
Total shares issuable on exercise		26,951

During the year ended December 31, 2018, the Company issued 565,895 shares of common stock upon the exercise of August 2013 Warrants with an exercise price of $4.80. As of December 31, 2018, the unexercised August 2013 Warrants expired by their terms. In addition, SVB and MidCap's assignee exercised all 117,074 of the September 2016 Warrants with an exercise price of $2.25 and 26,951 of the December 2017 Warrants with an exercise price of $4.27, in each case via cashless exercise in exchange for 95,335 and 19,750 shares of the Company's common stock, respectively. As of December 31, 2018 no August 2013 or September 2016 warrants are outstanding.

The fair value of the warrants described in the table above is measured using the Black-Scholes valuation model. Inherent in the Black-Scholes valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.

The assumptions used by the Company are summarized in the following table:



December 2017 Warrants	December 6, 2017
Closing stock price	$	5.10
Expected dividend rate	—		%
Expected stock price volatility	86.4		%
Risk-free interest rate	2.2		%
Expected life (years)	6.00

ICT Warrants

On December 21, 2017, the Company received $5.2 million (gross of withholding tax) from Innovative Cellular Therapeutics CO., LTD. (ICT), of which $4.0 million was allocated to the purchase of a warrant for 818,424 shares of the Company's common stock based on the fair value on the date of grant and the remaining $1.2 million was allocated as consideration for the license agreement described in note 4. The fair value of the warrant was based on the closing price as of December 6, 2017 of $4.90 at an exercise price of $0.01 per share. On December 27, 2017, ICT exercised the warrant via a cashless exercise in exchange for 816,850 shares of the Company’s common stock. There were no warrants issued to ICT outstanding as of December 31, 2017.