Stock-based Compensation

3 Months Ended

Mar. 31, 2015

7. Stock-based Compensation

In July 2014, the Company adopted the 2014 Stock Incentive Plan (the “Plan”), under which 525,700 shares of common stock are authorized for issuance to employees, officers, directors, consultants and advisors of the Company. In connection with the Company’s reincorporation into Virginia in July 2014, each outstanding option to purchase shares of common stock under the Company’s 2012 Stock Incentive Plan and 2002 Stock Plan, was automatically terminated and replaced with an option to purchase shares of common stock under the Plan having the same vesting terms and exercise price as the option that was replaced. The Plan provides for granting of both Internal Revenue Service qualified incentive stock options (“ISOs”) and non-qualified options (“NQs”), restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). Stock options generally vest over a four year period of service; however, certain options contain performance conditions. The options generally have a ten year contractual life and, upon termination, vested options are generally exercisable between one and three months following the termination date, while unvested options are forfeited immediately.

In April 2015, the Plan was amended to increase the maximum number of shares of common stock that may be issued to 2,700,000 shares. In addition, an “evergreen provision” was added to the Plan that allows for an annual increase in the number of shares of common stock available for issuance under the Plan. The annual increase will be added on the first day of each fiscal year beginning with the fiscal year ending December 31, 2016, and on each anniversary thereof until the expiration of the Plan equal to 4% of the outstanding shares of our common stock on December 31st of the immediately preceding fiscal year (or such lesser number of shares of common stock as determined by the board of directors).

Restricted common stock

A summary of the Company’s restricted stock activity for the three months ended March 31, 2015 and related information is as follows:

	Shares		Weighted- average purchase price per share
Unvested at December 31, 2014	15,387		$	0.69
Vested	(9,709	)	0.69

Unvested at March 31, 2015 (1)	5,678		$	0.69

(1)

Excludes 72,463 shares of unvested restricted stock remaining from the early exercise of stock options as of March 31, 2015.

Stock options

A summary of the Company’s stock option activity and related information follows:

	Shares		Weighted- average exercise price per share		Weighted- average remaining contractual term (years)	Aggregate intrinsic value
Outstanding at December 31, 2014	281,029		$	0.69
Granted	638,095		5.73
Exercised	(115,559	)	3.98
Canceled	—		—

Outstanding at March 31, 2015	803,565		$	4.23	9.3	$	1,761

Exercisable at March 31, 2015	132,057		$	1.71	7.3	$	621

Vested and expected to vest at March 31, 2015	778,817		$	4.32	9.4	$	1,636

The fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model using the following assumptions:

	Three months ended March 31,
	2015		2014
Risk-free interest rate	1.6	%	1.8	%
Dividend yield	—		—
Volatility	77	%	77	%
Expected term (years)	6.25		6.25