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Note 7 - Stock-based Compensation
 12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
Note 
7
 — Stock-Based Compensation
 
Stock Incentive Plan
 
As of
December 
31,
2017,
the Company had
two
stock-based employee compensation plans, the Stock Incentive Plan (“Incentive Plan”) and the Employee Stock Purchase Plan (“ESPP”). The Incentive Plan was amended and restated in
April 2017
and approved by the Company’s stockholders in
May 2017.
The ESPP was amended and restated in
March 2014
and approved by the Company’s stockholders in
May 2014.
Stock-based compensation expense of
$12,621
(
$12,421
of expense related to the Incentive Plan,
$200
of expense related to the ESPP) was recognized during
2017,
while
$8,487
(
$8,340
of expense related to the Incentive Plan,
$147
of expense related to the ESPP) was recognized during
2016,
and
$9,705
(
$9,485
of expense related to the Incentive Plan,
$220
of expense related to the ESPP) was recognized during
2015.
 
 
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,
    2017   2016   2015
Research and development   $
9,602
     $
6,088
     $
7,580
  
General and administrative    
3,019
      
2,399
      
2,125
  
Total stock-based compensation expense   $
12,621
     $
8,487
     $
9,705
  
 
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 and restricted stock units 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, 2017,
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.
As of
December 31, 2017,
30%
of the
December 2014
grants have vested based upon achievement of successful completion of an HAE patient trial with a
2
nd
generation compound, for which vesting occurred in
August 2017.
Thus, as of
December 31, 2017,
25%
of the
August 2013
performance-based grants and
70%
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, 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
  
Plan amendment    
3,800
      
—
      
—
  
Restricted stock awards granted    
(34
 )    
—
      
—
  
Restricted stock awards cancelled    
22
      
—
      
—
  
Stock option awards granted    
(2,248
 )    
2,248
      
3.20
  
Stock option awards exercised    
—
      
(107
 )    
2.63
  
Stock option awards cancelled    
717
      
(717
 )    
10.78
  
Balance at December 31, 2016    
2,273
      
12,095
      
6.55
  
Plan amendment    
1,000
      
—
      
—
  
Restricted stock awards granted    
(22
 )    
—
      
—
  
Restricted stock awards cancelled    
12
      
—
      
—
  
Stock option awards granted    
(3,915
 )    
3,915
      
5.33
  
Stock option awards exercised    
—
      
(438
 )    
3.50
  
Stock option awards cancelled    
1,120
      
(1,120
 )    
9.72
  
Balance at December 31, 2017    
468
      
14,452
     $
6.06
  
 
As of
December 31, 2017,
there were
210
restricted stock unit awards outstanding.
 
For stock option awards granted under the Incentive Plan during
2017,
2016
and
2015,
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
2017,
2016
and
2015
was
$3.63,
$2.17
and
$7.72,
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
2017,
2016,
and
2015.
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
 
    2017   2016   2015
Expected Life    
5.5
      
5.5
      
5.5
  
Expected Volatility    
82
 %    
82
 %    
81
 %
Expected Dividend Yield    
0.0
 %    
0.0
 %    
0.0
 %
Risk-Free Interest Rate    
2.0
 %    
1.4
 %    
1.6
 %
 
The total intrinsic value of stock option awards exercised under the Incentive Plan was
$1,964
during
2017,
$339
during
2016
and
$10,117
during
2015.
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,
2017,
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
  
1,724
    
4.7
     $
1.64
      
1,598
     $
1.55
  
  3
to
6
  
8,303
    
7.5
      
4.63
      
3,066
      
4.31
  
  6
to
9
  
854
    
3.0
      
6.90
      
848
      
6.89
  
  9
to
12
  
2,857
    
7.1
      
11.00
      
1,383
      
10.98
  
  12
to
15
  
619
    
6.9
      
12.29
      
308
      
12.39
  
  15
to
18
  
95
    
7.5
      
15.39
      
47
      
15.39
  
$ 0
to
18
  
14,452
    
6.8
     $
6.06
      
7,250
     $
5.69
  
 
The weighted average remaining contractual life of stock option awards exercisable under the Incentive Plan at
December 
31,
2017
was
5.1
years.
 
The aggregate intrinsic value of stock option awards outstanding and exercisable under the Incentive Plan at
December 
31,
2017
was
$7,631.
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
$9,310
during
2017,
$6,380
during
2016
and
$4,492
during
2015.
 
As of
December 
31,
2017,
the number of stock option awards vested and expected to vest under the Incentive Plan is
13,267.
The weighted average exercise price of these stock option awards is
$5.95
and their weighted average remaining contractual life is
6.8
years.
 
The following table summarizes the changes in the number and weighted-average grant-date fair value of non-vested stock option awards during
2017:
 
    Non-Vested
Stock Option
Awards		   Weighted Average
Grant-Date Fair
Value
Balance December 31, 2016    
5,598
     $
5.40
  
Stock option awards granted    
3,915
      
3.63
  
Stock option awards vested    
(1,916
 )    
4.86
  
Stock option awards forfeited    
(395
 )    
5.84
  
Balance December 31, 2017    
7,202
     $
4.56
  
 
As of
December 
31,
2017,
there was approximately
$17,785
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:
$7,607
in
2018,
$5,452
in
2019,
$3,365
in
2020
and
$1,361
in
2021.
 
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
326
 shares remain available for purchase at
December 
31,
2017.
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
95,
75
and
41
shares of common stock purchased under the ESPP in
2017,
2016,
and
2015,
respectively, at a weighted average price per share of
$3.61,
$4.36
and
$8.65,
respectively. Expense of
$200,
$147
and
$220
related to the ESPP was recognized during
2017,
2016,
and
2015,
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
2017,
2016,
and
2015,
were
$2.18,
$1.95
and
$4.93,
respectively.