Note 6 — Stock-Based Compensation

Stock Incentive Plan

As of December 31, 2015, the Company had two stock-based employee compensation plans, the Stock Incentive Plan (“Incentive Plan”) and the Employee Stock Purchase Plan (“ESPP”), both which were amended and restated in March 2014 and approved by the Company’s stockholders in May 2014. Stock-based compensation expense of $9,705 ($9,485 of expense related to the Incentive Plan, $220 of expense related to the ESPP) was recognized during 2015, while $10,177 ($9,963 of expense related to the Incentive Plan, $214 of expense related to the ESPP) was recognized during 2014, and $4,368 ($4,253 of expense related to the Incentive Plan, $115 of expense related to the ESPP) was recognized during 2013.

The Company accounts for stock-based compensation in accordance with FASB authoritative guidance regarding share-based payments. Total stock-based compensation was allocated as follows:

	Year Ended December 31,
	2015		2014		2013
Research and development	$	7,580	$	8,906	$	3,664
General and administrative		2,125		1,271		704
Total stock-based compensation expense	$	9,705	$	10,177	$	4,368

The Company grants stock option awards and restricted stock unit awards to its employees, directors, and consultants under the Incentive Plan. Under the Incentive Plan, stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Commencing March 1, 2011, stock option awards granted to employees generally vest 25% each year until fully vested after four years. In January 2013, the Company made retention grants of stock option awards and restricted stock units. These awards vest 50% each year until fully vested after two years. In August 2013 and December 2014, the Company issued 1,032 and 1,250 performance-based stock options, respectively. These awards vest upon successful completion of specific development milestones. As of December 31, 2015, 75% of the August 2013 grants have vested based upon achievement of three milestones: (1) successful completion of the OPuS-1 clinical trial, for which vesting occurred in the second quarter of 2014, (2) FDA approval of RAPIVAB for which vesting occurred in the fourth quarter of 2014, and (3) initiation of a Phase 1 clinical trial to evaluate the safety, pharmacokinetics and pharmacodynamics of orally-administered BCX7353 in healthy volunteers, for which vesting occurred in the second quarter of 2015. Thus, as of December 31, 2015, 25% of the August 2013 performance-based grants and 100% of the December 2014 performance-based grants remain unvested and no compensation expense has been recognized for these portions of the previously issued performance-based grants. Stock option awards granted to non-employee directors of the Company generally vest monthly over one year. All stock option awards have contractual terms of 5 to 10 years. The vesting exercise provisions of all awards granted under the Incentive Plan are subject to acceleration in the event of certain stockholder-approved transactions, or upon the occurrence of a change in control as defined in the Incentive Plan.

Related activity under the Incentive Plan is as follows:

	Awards Available			Options Outstanding			Weighted Average Exercise Price
Balance at December 31, 2012		2,815			8,073		$	6.09
Restricted stock awards granted		(310	)		—			—
Restricted stock awards cancelled		53			—			—
Stock option awards granted		(3,277	)		3,277			3.05
Stock option awards exercised		—			(563	)		2.37
Stock option awards cancelled		1,801			(1,801	)		7.22
Balance at December 31, 2013		1,082			8,986			4.99
Plan amendment		3,750			—			—
Restricted stock awards granted		(593	)		—			—
Restricted stock awards cancelled		—			—			—
Stock option awards granted		(1,965	)		1,965			10.99
Stock option awards exercised		—			(1,258	)		4.78
Stock option awards cancelled		88			(88	)		8.83
Balance at December 31, 2014		2,362			9,605			6.21
Restricted stock awards granted		(163	)		—			—
Restricted stock awards cancelled		1			—			—
Stock option awards granted		(2,217	)		2,217			11.52
Stock option awards exercised		—			(1,118	)		4.36
Stock option awards cancelled		33			(33	)		9.87
Balance at December 31, 2015		16			10,671		$	7.50

For stock option awards granted under the Incentive Plan during 2015, 2014 and 2013, the fair value was estimated on the date of grant using a Black-Scholes option pricing model and the assumptions noted in the table below. The weighted average grant date fair value of these awards granted during 2015, 2014 and 2013 was $7.72, $8.02, and $1.28, respectively. The fair value of the stock option awards is amortized to expense over the vesting periods using a straight-line expense attribution method. The following explanations describe the assumptions used by the Company to value the stock option awards granted during 2015, 2014, and 2013. The expected life is based on the average of the assumption that all outstanding stock option awards will be exercised at full vesting and the assumption that all outstanding stock option awards will be exercised at the midpoint of the current date (if already vested) or at full vesting (if not yet vested) and the full contractual term. The expected volatility represents the volatility over the most recent period corresponding with the expected life. The Company has assumed no expected dividend yield, as dividends have never been paid to stockholders and will not be for the foreseeable future. The weighted average risk-free interest rate is the implied yield currently available on zero-coupon government issues with a remaining term equal to the expected term.

Weighted Average Assumptions for Stock Option Awards Granted under the Incentive Plan

	2015			2014			2013
Expected Life		5.5			5.5			4.7
Expected Volatility		81	%		87	%		84	%
Expected Dividend Yield		0.0	%		0.0	%		0.0	%
Risk-Free Interest Rate		1.6	%		1.6	%		0.7	%

The total intrinsic value of stock option awards exercised under the Incentive Plan was $10,117 during 2015, $8,522 during 2014, $738 and during 2013. The intrinsic value represents the total proceeds (fair market value at the date of exercise, less the exercise price, times the number of stock option awards exercised) received by all individuals who exercised stock option awards during the period.

The following table summarizes, at December 31, 2015, by price range: (1) for stock option awards outstanding under the Incentive Plan, the number of stock option awards outstanding, their weighted average remaining life and their weighted average exercise price; and (2) for stock option awards exercisable under the Plan, the number of stock option awards exercisable and their weighted average exercise price:

				Outstanding					Exercisable
Range				Number	Weighted Average Remaining Life		Weighted Average Exercise Price		Number		Weighted Average Exercise Price
$	0	to	3	1,826		6.4	$	1.51		1,322	$	1.55
	3	to	6	2,792		6.1		4.63		2,329		4.53
	6	to	9	1,153		4.5		7.10		1,070		7.13
	9	to	12	3,728		8.1		11.07		714		11.45
	12	to	15	1,077		6.4		12.44		374		12.65
	15	to	18	95		9.5		15.39		—		—
$	0	to	18	10,671		6.7	$	7.50		5,809	$	5.70

The weighted average remaining contractual life of stock option awards exercisable under the Incentive Plan at December 31, 2015 was 5.0 years.

The aggregate intrinsic value of stock option awards outstanding and exercisable under the Incentive Plan at December 31, 2015 was $28,511. The aggregate intrinsic value represents the value (the period’s closing market price, less the exercise price, times the number of in-the-money stock option awards) that would have been received by all stock option award holders under the Incentive Plan had they exercised their stock option awards at the end of the year.

The total fair value of the stock option awards vested under the Incentive Plan was $4,492 during 2015, $2,844 during 2014, and $3,483 during 2013.

As of December 31, 2015, the number of stock option awards vested and expected to vest under the Incentive Plan is 9,633. The weighted average exercise price of these stock option awards is $7.51 and their weighted average remaining contractual life is 6.6 years.

The following table summarizes the changes in the number and weighted-average grant-date fair value of non-vested stock option awards during 2015:

	Non-Vested Stock Option Awards			Weighted Average Grant-Date Fair Value
Balance December 31, 2014		4,385		$	4.27
Stock option awards granted		2,217			7.72
Stock option awards vested		(1,711	)		2.63
Stock option awards forfeited		(28	)		6.39
Balance December 31, 2015		4,863		$	6.40

As of December 31, 2015, there was approximately $18,607 of total unrecognized compensation cost related to non-vested employee stock option awards and restricted stock units granted by the Company. That cost is expected to be recognized as follows: $7,023 in 2016, $6,010 in 2017, $3,891 in 2018, and $1,683 in 2019.

Employee Stock Purchase Plan

The Company has reserved a total of 1,475 shares of common stock to be purchased under the ESPP, of which 497 shares remain available for purchase at December 31, 2015. Eligible employees may authorize up to 15% of their salary to purchase common stock at the lower of 85% of the beginning or 85% of the ending price during six-month purchase intervals. No more than 3 shares may be purchased by any one employee at the six-month purchase dates and no employee may purchase stock having a fair market value at the commencement date of $25 or more in any one calendar year.

There were 41, 49 and 89 shares of common stock purchased under the ESPP in 2015, 2014, and 2013, respectively, at a weighted average price per share of $8.65, $6.29, and $1.39, respectively. Expense of $220, $214, and $115, related to the ESPP was recognized during 2015, 2014, and 2013, respectively. Compensation expense for shares purchased under the ESPP related to the purchase discount and the “look-back” option were determined using a Black-Scholes option pricing model. The weighted average grant date fair values of shares granted under the ESPP during 2015, 2014, and 2013, were $4.93, $4.41, and $1.27, respectively.