7. STOCK INCENTIVE PLANS

2015 Equity Incentive Plan

In March 2015, the Company’s board of directors and stockholders approved and adopted the 2015 Equity Incentive Plan (“2015 Plan”). Under the 2015 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other awards to individuals who are employees, officers, directors, or consultants of the Company. A total of 1,634,456 shares of common stock were reserved for issuance under the 2015 Plan. The shares reserved exclude shares of common stock reserved for issuance under the 2013 Equity Incentive Plan, or 2013 Plan. Upon effectiveness of the 2015 Plan, 194,564 shares were remaining under the 2013 Plan and were added to the 2015 Plan reserve. In addition, the number of shares of stock available for issuance under the 2015 Plan will be automatically increased each January 1, beginning on January 1, 2016, by 4% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31 or such lesser number as determined by the Company’s board of directors.

Terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2015 Plan. Stock options granted by the Company typically vest over a four year period. Certain stock options are subject to acceleration of vesting in the event of certain change of control transactions. The stock options may be granted for a term of up to ten years from the date of grant. The exercise price for stock options granted under the 2015 Plan must be at a price no less than 100% of the estimated fair value of the shares on the date of grant as determined by the board of directors, provided that for an incentive stock option granted to an employee who at the time of grant owns stock representing more than 10% of the voting power of all classes of stock of the Company, the exercise price shall be no less than 110% of the estimated value on the date of grant. As of September 30, 2015, the Company had 1,838,333 shares available for future issuance to employees, nonemployee directors, and consultants of the Company under the 2015 Plan.

Employee Stock Purchase Plan

In March 2015, the Company’s board of directors and stockholders approved and adopted the 2015 Employee Stock Purchase Plan (“ESPP”). A total of 245,168 shares of common stock were initially reserved for issuance under the ESPP. In addition, the number of shares of stock available for issuance under the ESPP will be automatically increased each January 1, beginning on January 1, 2016, by the lesser of (i) 1% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31, or (ii) 490,336 shares.

The ESPP allows substantially all employees to purchase the Company’s common stock through a payroll deduction at a price equal to 85% of the lower of the fair market value of the stock as of the beginning or the end of each offering period. An employee’s payroll deductions under the under the ESPP are limited to 15% of the employee’s eligible compensation and employees may not purchase more than $25,000 of stock during any calendar year. As of September 30, 2015, no shares had been issued from the ESPP.

Restricted Stock

Upon inception of the Company in December 2012, 385,825 shares of common stock were issued for $980. Of these shares, 196,849 were issued to 5AM Ventures and the remaining 188,976 were issued to two of the Company’s founders. In February 2013, vesting restrictions were placed on 118,110 shares of the 188,976 shares issued to the two founders. Given there was no change in fair value of the common stock, the modification of the founders’ stock agreements did not result in any incremental expense on the date of modification. The shares purchased by 5AM Ventures contained no vesting provisions.

The Company did not issue any shares of common stock to employees or consultants during the nine months ended September 30, 2015. During the nine months ended September 30, 2014, 78,812 shares of common stock were issued to employees and consultants of the Company at a weighted average purchase price of $0.13 per share.

Except for the shares purchased by 5AM Ventures, all shares issued since inception were subject to service-based vesting terms and the vesting of certain shares will accelerate on changes of control or termination of employment. At September 30, 2015, 256,614 shares were vested and 14,718 shares were subject to repurchase by the Company.

Stock Options

The following table summarizes stock option activity during the nine months ended September 30, 2015:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Total Aggregate Intrinsic Value
Outstanding at December 31, 2014		709,136		$	2.29		9.73	$	2,522
Options granted		849,791			8.22
Options exercised		(47,648	)		2.44
Options canceled		(103,813	)		2.58
Outstanding at September 30, 2015		1,407,466			5.85		9.04		9,898
Vested and expected to vest at September 30, 2015		1,407,466			5.85		9.04		9,898
Vested at September 30, 2015		417,594			4.06		8.46		3,649
Exercisable at September 30, 2015		1,116,205		$	5.11		8.99	$	8,522

Stock-based compensation expense recognized for restricted shares, stock options, and the ESPP has been reported in the statements of operations as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Research and development	$	324	$	17	$	1,260	$	21
General and administrative		442		32		985		36
Total	$	766	$	49	$	2,245	$	57

The weighted-average grant date fair value of stock options granted by the Company during the nine months ended September 30, 2015 was $5.57 per share. The total grant date fair value of stock options that vested during the nine months ended September 30, 2015 was $1.7 million. As of September 30, 2015, total unrecognized share-based compensation expense related to unvested employee stock options of the Company was approximately $4.7 million. This unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.7 years on a straight-line basis.

As of September 30, 2015, total unrecognized compensation expense related to the Company’s ESPP was approximately $0.3 million. This unrecognized compensation cost is expected to be recognized over approximately 1.7 years.