10. Stock-Based Compensation

2014 Equity Incentive Plan—In March 2014, the Company’s board of directors and stockholders approved the 2014 Equity Incentive Plan (2014 Plan) under which 11,109,000 shares of Class A common stock are reserved for the granting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to employees, directors and consultants. Recipients of stock awards are eligible to purchase shares of the Company’s common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The maximum term of awards granted under the 2014 Plan is ten years. Stock awards are generally not exercisable prior to the applicable vesting date, unless otherwise accelerated under the terms of the applicable stock plan agreement. Unvested shares of the Company’s common stock issued in connection with an early exercise allowed by the Company may be repurchased by the Company upon termination of the optionee’s service with the Company.

2015 Equity Incentive Plan—In July 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (2015 Plan). The 2015 Plan permits the grant of incentive stock options, within the meaning of Section 422 of the Code, to the Company’s employees and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to the Company’s employees, directors and consultants. A total of 4,257,572 shares are reserved for issuance pursuant to the 2015 Plan. In addition, the shares reserved for issuance under the 2015 Plan will include shares subject to stock options or similar awards granted under the 2014 Plan that expire or terminate without having been exercised in full and shares issued pursuant to awards granted under the 2014 Plan that are forfeited to or repurchased by the Company (provided that the maximum number of shares that may be added to the 2015 Plan pursuant to this provision is 8,439,494 shares).

Stock-based Awards to an Officer—In March 2015, the Company granted to an officer an option to purchase 1,851,500 shares of the Company’s Class A common stock at an exercise price of $2.20 per share. The option vests in equal monthly installments over a period of four years from the date of grant. In March 2015, the board of directors approved the issuance of a warrant to purchase Class A common stock to an officer of the Company. The warrant has a four year term and an exercise price of $2.00 per share. The maximum number of shares underlying the warrant is 17,589,250 of which 7,406,000 vest over a 40-month service period beginning on April 1, 2015 and the remaining 10,183,250 vest based on the achievement of various milestones. At September 30, 2015, a total of 9,442,650 were vested.

Issuance of options and restricted stock units to Officers—In accordance with their employment agreements, the Company granted to its Chief Executive Officer and Chief Operating Officer upon the initial public offering a total of 1,455,450 options to purchase common stock with an exercise price of $25.00 per share and 970,300 restricted stock units representing the right to receive one share of the Company’s common stock for each restricted stock unit that becomes vested. The options and restricted stock units vested 50% at grant and the remaining 50% will vest upon the first anniversary of the initial public offering.

Stock Options

The following table summarizes stock option activity under the equity incentive plans for the nine months ended September 30, 2015:

	Number of Shares			Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Life (in years)
Outstanding at December 31, 2014		5,137,914
Options granted		5,713,899		$	7.92
Options forfeited		(7,715	)	$	0.42
Options exercised		(1,032,742	)	$	0.82
Outstanding at September 30, 2015		9,811,356		$	4.97	$	83,335		7.65
Vested and Exercisable at September 30, 2015		4,046,009		$	5.32	$	34,694		8.18

The following table provides a summary of options outstanding and vested as of September 30, 2015:

Exercise Prices		Number Outstanding		Weighted- Average Life (in Years)		Number Exercisable		Weighted- Average Life (in Years)
$0.22			1,404,060		8.46		987,472		8.46
$0.42			1,115,144		8.84		949,281		8.78
$1.76			1,578,253		9.20		357,420		9.20
$2.00			2,406,949		9.37		792,673		9.37
$2.20			1,851,500		3.48		231,438		3.48
$	25.00		1,455,450		6.73		727,725		6.73
			9,811,356		7.65		4,046,009		8.18

The aggregate intrinsic value of stock options exercised during the three months ended September 30, 2015 was $882.

The total unrecognized compensation cost related to non-vested stock options as of September 30, 2015 is $33,079, which is expected to be recognized over a weighted-average period of 2.09 years.

The Company records equity instruments issued to non-employees as expense at the fair value over the related service period as determined in accordance with the authoritative guidance and periodically revalues the equity instruments as they vest. There were no stock options granted to non-employees during the three months ended September 30, 2015 and 2014. As of September 30, 2015, there were 347,155 non-employee options outstanding of which 136,933 were vested.

The Company uses a Black-Scholes option-pricing model to determine the fair value of stock-based compensation under ASC Topic 718, Stock Compensation. The assumptions used for employee and non-employee stock options are presented in the table below:

	Nine Months Ended September 30,
	2015				2014
	Employee Grants		Non-Employee Grants		Employee Grants		Non-Employee Grants
Expected term (years)	4.00-5.52			10.00	5.00-5.52			10.00
Risk-free interest rate	1.45%-1.79%			2.14%	1.58%-1.89%			2.70%
Expected volatility		80%		80%		91%		91%
Dividend yield		0%		0%		0%		0%
Weighted-average grant date fair value	$12.08		$5.19		$0.16		$0.19

The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The estimated volatility is based on a weighted-average calculation of a peer group of comparable companies whose share prices are publicly available. The risk-free interest rate assumption was based on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The weighted-average expected life of options was estimated using the average of the contractual term and the weighted-average vesting term of the options.

Restricted Stock Units

The following table summarizes the restricted stock units activity under the 2015 Plan:

	Number of Restricted Stock Units Outstanding			Weighted-Average Grant Date Fair Value
Unvested balance at December 31, 2014		-
Granted		970,300		$	25.00
Vested, net of shares withheld for employee payroll taxes		(388,538	)	$	25.00
Shares withheld for employee payroll taxes		(96,612	)	$	25.00
Unvested balance at September 30, 2015		485,150		$	25.00

As of September 30, 2015, there was $10,108 of unrecognized stock-based compensation expense related to restricted stock units granted to employees that is expected to be recognized over a weighted-average period of 0.83 years.

Stock-Based Compensation

The following table presents all stock-based compensation as included in the Company’s condensed consolidated statements of operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Stock-based compensation expense:
Warrants for Class A common stock to an officer and a director related to Inex Bio, Inc. acquisition (Note 3)	$	—	$	—	$	22,747	$	—
Warrants for Class A common stock to an officer		4,745		—		80,663
Employee stock options		16,424		26		20,033		190
Non-employee stock options		784		3		3,074		6
Restricted stock units		14,150		—		14,150		—
	$	36,103	$	29	$	140,667	$	196
Stock-based compensation expense in operating expenses:
Research and development	$	364	$	—	$	1,140	$	—
Selling, general and administrative		35,739		29		139,527		196
	$	36,103	$	29	$	140,667	$	196