Note

— Stock-Based Compensation

As of

December 31, 2019,

the Company had

three

stock-based employee compensation plans, the Amended and Restated Stock Incentive Plan (“Incentive Plan”), the Inducement Equity Incentive Plan (“Inducement Plan”) and the Employee Stock Purchase Plan (“ESPP”). The Incentive Plan was amended and restated on

April 19, 2019

and approved by the Company’s stockholders on

May 29, 2019.

The Inducement Plan was adopted by the Board of Directors on

April 24, 2019.

The ESPP was amended and restated in

March 2014

and approved by the Company’s stockholders in

May 2014.

Stock-based compensation expense of

$17,719

(

$17,164

of expense related to the Incentive Plan,

$323

of expense related to the Inducement Plan,

$232

of expense related to the ESPP) was recognized during

2019,

while

$9,396

(

$9,223

of expense related to the Incentive Plan,

$173

of expense related to the ESPP) was recognized during

2018,

and

$12,621

(

$12,421

of expense related to the Incentive Plan,

$200

of expense related to the ESPP) was recognized during

2017.

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,
	2019		2018		2017
Research and development	$	13,977	$	6,867	$	9,602
General and administrative		3,742		2,529		3,019
Total stock-based compensation expense	$	17,719	$	9,396	$	12,621

Stock Incentive Plan

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

2011,

stock option awards and restricted stock units granted to employees generally vest

25%

each year until fully vested after

four

years. In

August 2013,

December 2014

and

December 2019,

the Company issued

1,032,

1,250

and

315

performance-based stock options, respectively. These awards vest upon successful completion of specific development milestones. As of

December 31, 2019,

75%

of the

August 2013

grants have vested based upon achievement of

three

milestones. As of

December 31, 2019,

30%

of the

December 2014

grants have vested. As of

December 31, 2019,

none

of the

December 2019

grants have vested and

compensation expense has been recognized. During

2019,

the Company recognized

$4,998

of stock compensation expense related to

two

milestones within the

December 2014

grants for which achievement became probable. Stock option awards granted to non-employee directors of the Company generally vest over

one

year. All stock option awards have contractual terms of

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, 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
Plan amendment		4,400			-			-
Restricted stock awards granted		(13	)		-			-
Stock option awards granted		(4,272	)		4,272			7.15
Stock option awards exercised		-			(1,011	)		2.92
Stock option awards cancelled		222			(222	)		7.44
Balance at December 31, 2018		805			17,491			6.49
Plan amendment		4,000			-			-
Restricted stock awards granted		(27	)		-			-
Stock option awards granted		(4,511	)		4,511			3.91
Stock option awards exercised		-			(251	)		3.75
Stock option awards cancelled		701			(701	)		6.82
Balance at December 31, 2019		968			21,050		$	5.96

For stock option awards granted under the Incentive Plan during

2019,

2018,

and

2017,

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

2019,

2018,

and

2017

was

$2.63,

$4.92

and

$3.63,

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

2019,

2018,

and

2017.

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

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.

Inducement Equity Incentive Plan

The Company has the ability to grant stock option awards to newly-hired employees as inducements material to each employee entering employment with the Company. Stock option awards granted to newly hired employees generally vest

25%

each year until fully vested after

four

years. Each stock option has a term of

years and is subject to the terms and conditions of the Inducement Equity Incentive Plan. The vesting and exercise provisions of all awards granted under the Inducement Equity 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 Inducement Equity Incentive Plan.

During

2019,

the Company’s Board of Directors approved the issuance of

1,379

options to newly hired employees. The options were granted with an exercise price equal to the Company’s market price on the respective dates of grant. 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 stock option awards was

$2.41.

The weighted-average exercise price of the inducement grants issued during

2019

was

$3.58.

As of

December 31, 2019,

1,329

of those options are outstanding.

The following table summarizes the key assumptions used by the Company to value the stock option awards granted during

2019,

2018

and

2017,

respectively. 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 historical volatility on the Company’s publicly traded common stock. The Company has assumed

expected dividend yield, as dividends have never been paid to stock or option holders and will

not

be paid 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 to Employees and Directors under the Plans

	2019			2018			2017
Expected Life		5.5			5.5			5.5
Expected Volatility		81	%		82	%		82	%
Expected Dividend Yield		0.0	%		0.0	%		0.0	%
Risk-Free Interest Rate		1.8	%		2.7	%		2.0	%

The total intrinsic value of stock option awards exercised under the Incentive Plan was

$1,127

during

2019,

$4,504

during

2018

and

$1,964

during

2017.

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.

stock option awards were exercised under the Inducement Plan in

2019.

The following table summarizes, at

December

31,

2019,

by price range: (

) 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 (

) 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	1,929		5.5	$	2.02		1,159	$	1.64
	3	to	6	11,724		7.2		4.17		5,085		4.55
	6	to	9	4,941		7.7		7.14		1,830		6.98
	9	to	12	3,086		5.3		10.78		2,013		10.91
	12	to	15	604		5.1		12.29		509		12.31
	15	to	18	95		5.5		15.39		95		15.39
$	0	to	18	22,379		6.9	$	5.82		10,691	$	6.31

The weighted average remaining contractual life of stock option awards exercisable under the plans at

December

31,

2019

was

4.9

years.

The aggregate intrinsic value of stock option awards outstanding and exercisable under the plans at

December

31,

2019

was

$3,926.

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 plans 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 plans was

$12,499

during

2019,

$8,952

during

2018

and

$9,310

during

2017.

As of

December

31,

2019,

the number of stock option awards vested and expected to vest under the plans is

20,324.

The weighted average exercise price of these stock option awards is

$5.83

and their weighted average remaining contractual life is

6.9

years.

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

2019:

	Non-Vested Stock Option Awards			Weighted Average Grant-Date Fair Value
Balance December 31, 2018		9,295		$	4.78
Stock option awards granted		5,891			2.58
Stock option awards vested		(2,794	)		4.48
Stock option awards forfeited		(704	)		4.38
Balance December 31, 2019		11,688		$	3.77

As of

December

31,

2019,

there was approximately

$26,552

of total unrecognized compensation cost related to non-vested employee stock option awards granted by the Company. That cost is expected to be recognized as follows:

$9,746

2020,

$7,950

2021,

$6,743

2022

and

$2,113

2023.

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

119

shares remain available for purchase at

December

31,

2019.

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.

more than

may

be purchased by any

one

employee at the

six

-month purchase dates and

employee

may

purchase stock having a fair market value at the commencement date of

$25

or more in any

one

calendar year.

There were

115,

and

shares of common stock purchased under the ESPP in

2019,

2018,

and

2017,

respectively, at a weighted average price per share of

$3.51,

$3.83

and

$3.61,

respectively. Expense of

$232,

$173

and

$200

related to the ESPP was recognized during

2019,

2018,

and

2017,

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

2019,

2018,

and

2017,

were

$2.01,

$1.89

and

$2.18,

respectively.