Stock-Based Compensation Expense

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Expense

(3) Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense related to employee stock options for the three-month and six-month periods ended June 30, 2016 and June 30, 2015, which was allocated as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
	(in thousands)				(in thousands)
General and administrative	$	119	$	127	$	255	$	240
Research and development		72		85		138		166
	$	191	$	212	$	393	$	406

We use the Black-Scholes option pricing model to value stock options. The estimated fair value of employee stock options granted during the six-month periods ended June 30, 2016 and 2015 was calculated using the Black-Scholes model with the following weighted-average assumptions:

	For the Six			For the Six
	Months Ended			Months Ended
	June 30, 2016			June 30, 2015
Risk-free interest rate		1.51	%		1.42-1.49	%
Expected dividend yield		0.00	%		0.00	%
Expected volatility		101.66	%		103.64	%
Expected life (years)		6.46			6.23

The risk-free interest rate assumptions are based upon various U.S. Treasury rates as of the date of the grants. The dividend yield is based on the assumption that we do not expect to declare a dividend over the life of the options.

The volatility assumptions for the 2016 and 2015 periods are based on the weighted average volatility for the most recent one-year period as well as the volatility over the expected life of 6.46 years and 6.23 years, respectively. The expected life of employee stock options represents the weighted average combining the actual life of options that have already been exercised or cancelled with the expected life of all outstanding options. The expected life of outstanding options is calculated assuming the options will be exercised at the midpoint between the applicable vesting date and the full contractual term.

The Company estimates forfeiture rates at the time of grant and revises these estimates, if necessary, in subsequent periods if actual forfeitures differ from the estimates. Forfeitures are estimated based on the demographics of current option holders and standard probabilities of employee turnover.

The weighted-average fair value of the options granted for the six-month periods ended June 30, 2016 and 2015 are $0.46 and $2.41, respectively. We do not record tax-related effects on stock-based compensation given our historical and anticipated operating experience and offsetting changes in our valuation allowance which fully reserves against potential deferred tax assets.

Stock Options

The following table summarizes the stock option activity for the six months ended June 30, 2016:  

				Weighted		Weighted
				average		average		Aggregate
	Number			exercise		contractual		intrinsic
	of shares			price		life (years)		value
	(in thousands, except exercise price and contractual term data)
Stock options outstanding, January 1, 2016		2,237		$	4.16
Granted		580			0.56
Expired		(19	)		17.08
Stock options outstanding at June 30, 2016		2,798		$	3.32		7.19	$	7
Vested or expected to vest at June 30, 2016 (a)		2,592		$	3.48		7.03	$	6
Exercisable at June 30, 2016		1,634		$	4.51		5.92	$	-

(a) This represents the number of vested options as of June 30, 2016, plus the number of unvested options as of June 30, 2016 that we expect to vest in the future based on our estimated forfeiture rate.

Unrecognized stock-based compensation related to stock options was approximately $1.3 million as of June 30, 2016. This amount is expected to be expensed over a weighted average period of 2.4 years. There were no options exercised during the six-month periods ended June 30, 2016 or 2015.

The following table summarizes information about our stock options outstanding and exercisable as of June 30, 2016:

	Outstanding						Exercisable
			Weighted
			average		Weighted				Weighted
			remaining		average				average
Range of exercise	Number		contractual		exercise		Number		exercise
prices	of shares		life (in years)		price		of shares		price
	(number of shares in thousands)
$0.00 - $10.00		2,624		7.55	$	2.25		1,460	$	2.72
$10.01 - $20.00		90		1.19		15.14		90		15.14
$20.01 - $30.00		82		2.50		23.57		82		23.57
$30.01 - $41.00		2		0.80		41.00		2		41.00
		2,798		7.19	$	3.32		1,634	$	4.51