The 2016 Long-Term Incentive Plan (the “2016 Plan”), approved by the Company’s stockholders on December 12, 2016 (the “Adoption Date”), provided for the issuance of up to 3,000,000 shares of Common Stock reserved for issuance under the 2016 Plan plus any additional shares of Common Stock that were available for grant under the 2008 Incentive Plan (the “2008 Plan”) at the Adoption Date or would otherwise become available for grant under the 2008 Plan as a result of subsequent termination or forfeiture of awards under the 2008 Plan. At December 31, 2018, a total of 1,302,978 shares were available for new awards.

	Number of options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding at July 1, 2018		6,460,244		$	2.79
Granted		361,483			2.40
Exercised		(200,000	)		1.10
Forefeited		(10,600	)		2.76
Expired		(156,750	)		2.85
Outstanding at December 31, 2018		6,454,377		$	2.82		7.18	$	189
Exercisable at December 31, 2018		2,959,475		$	3.47		5.00	$	53

During the six months ended December 31, 2018, the Company granted 165,000 options to employees with ratable annual vesting over 3 years, 1,667 options to a non-executive director with 1-year cliff vesting, 95,000 options to two newly appointed non-executive directors with ratable annual vesting over 3 years and 99,816 options to external consultants with 1-year cliff

vesting. During the six months ended December 31, 2018, a total of 409,891 options vested. All option grants have a

10-year term.

In determining the grant date fair value of option awards under the equity incentive plans, the Company applied the Black-Scholes option pricing model. Based upon limited option exercise history, the Company has generally used the “simplified” method outlined in SEC Staff Accounting Bulletin No. 110 to estimate the expected life of stock option grants. Management believes that the historical volatility of the Company’s stock price

on the Nasdaq Stock Market best represents the expected volatility over the estimated life of the option. The risk-free interest rate is based upon published U.S. Treasury yield curve rates at the date of grant corresponding to the expected life of the stock option. An assumed dividend yield of zero reflects the fact that the Company has never paid cash dividends and has no intentions to pay dividends in the foreseeable future.

	Six Months Ended December 31,		Year Ended June 30,
	2018		2018		2017		2016
Option life (in years)		5.50 - 6.00		5.50 - 6.00		5.50 - 6.25		5.50 - 6.25
Stock volatility		59% - 61%		59% - 64%		70% - 72%		76% - 80%
Risk-free interest rate		2.78% - 3.09%		2.18% - 2.89%		1.23% - 2.08%		1.47% - 1.97%
Expected dividends		0.0%		0.0%		0.0%		0.0%

The following table summarizes information about employee, consultant and director stock options under the Company’s equity incentive plans for the six months ended December 31, 2018 and the years ended June 30, 2018, 2017 and 2016 (in thousands except per share amounts):

	Six Months Ended December 31,		Year Ended June 30,
	2018		2018		2017		2016
Weighted-average grant date fair value per share	$	1.37	$	1.06	$	1.95	$	2.74
Total cash received from exercise of stock options		219		503		99		490
Total intrinsic value of stock options exercised		284		152		53		967

Time-vested restricted stock units (“RSUs”) issued to date under the 2016 Plan generally vest on a ratable annual basis over 3 years. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period. The fair value of all time-vested RSUs is based on the closing share price of the Common Stock on the date of grant.

	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value
Nonvested at July 1, 2018		898,129		$	1.58
Vested		(305,616	)		1.05
Forfeited		(2,300	)		1.81
Nonvested at December 31, 2018		590,213		$	1.86

Performance Stock Units (“PSUs”) were awarded to certain employees in June 2017. The performance conditions associated with the PSU awards were as follows: (a) for

one third

of the PSUs, upon an FDA acceptance of the Company’s NDA submission of YUTIQ for review on or before March 31, 2018 and (b) for two-thirds of the PSUs, upon an FDA approval of YUTIQ on or before March 31, 2019. For each performance criteria achieved, 50% of the PSUs associated with that performance condition vest at the achievement date and 50% vest on the first anniversary of such date, in each case subject to continued employment through such date. As a result of the achievement of the first performance condition on March 19, 2018, 48,332 PSUs vested at that date and the other 48,334 PSUs became subject to a service-based condition with a vesting date of March 19, 2019. As a result of the achievement of the second performance condition on October 12, 2018, 96,668 PSUs vested at that date and the other

96,666

PSUs became subject to a service-based condition with a vesting date of October 12, 2019.

A total of 35,001 deferred stock units (“DSUs”) were issued to incumbent non-executive directors on June 21, 2018 with one-year cliff vesting and a grant date fair value of $1.95 per share. An additional 417 DSUs were awarded in September 2018 to one non-executive director with one-year cliff vesting and a grant date fair value of $2.32 per share. Subsequent to vesting, the DSUs will be settled in shares of Common Stock upon the earliest to occur of (i) each director’s termination of service on the Company’s Board of Directors and (ii) the occurrence of a change of control as defined in the award agreement.

In connection with the September 15, 2016 hire of the Company’s President and CEO, the Company granted 850,000 options to purchase Common Stock with ratable annual vesting over 4 years, an exercise price of $3.63 per share and a 10-year term. Although the stock options were not awarded under the 2008 Plan, the stock options are subject to and governed by the terms and conditions of the 2008 Plan. On the same date, the Company also granted an additional inducement award of 500,000 market-based Restricted Stock Units (“market-based RSUs”). Subject to a service condition, the number of shares underlying the market-based RSU that will vest is based upon a relative percentile rank of the 3-year change in the closing price of the Company’s Common Stock compared to that of the companies that make up the Nasdaq Biotechnology Index through September 15, 2019. The weighted-average grant date fair value of the market-based RSUs of $1.45 per share was determined using a Monte Carlo valuation model at the date of grant.

In connection with the May 14, 2018 hire of the Company’s Executive Vice President and General Manager, US (“EVP & GM”), the Company granted 375,000 options to purchase Common Stock with ratable annual vesting over 3 years, 65,000 options with 1-year cliff vesting and 225,000 PSUs. The options had an exercise price of $1.95 per share and a 10-year term and, although not awarded under the 2016 Plan, are subject to and governed by the terms and conditions of the 2016 Plan. The PSUs were subject to proportional vesting based on cumulative measurement for the 3-year period ending June 30, 2021, with two-thirds of the award based upon defined amounts of the Company’s product revenues and one-third upon measurement of the net present value of certain business development transactions consummated by the Company. As of September 26, 2018, the EVP & GM’s service with the Company ended and vesting of certain options was accelerated in accordance with the terms of the option awards, with an option exercise period through December 26, 2018.

In connection with the August 1, 2018 hire of the Company’s Chief Financial Officer, the Company granted as inducement awards (i) 385,000 options to purchase Common Stock with ratable annual vesting over 3 years and an exercise price of $2.22 per share; and (ii) 225,000 PSUs. The PSUs are subject to proportional vesting based on cumulative measurement for the 3-year period ending June 30, 2021, with two-thirds of the award based upon defined amounts of the Company’s product revenues and one-third based upon the net present value of each applicable business development transaction measured as of the date that each such transaction is consummated by the Company. The performance conditions of the PSUs were not deemed to be probable of occurrence at December 31, 2018 and, accordingly, no stock-based compensation has been recorded for the six months ended December 31, 2018.

In connection with the August 14, 2018 hire of the Company’s Senior Vice President of Regulatory and Quality, the Company granted as an inducement award 100,000 options to purchase Common Stock with ratable annual vesting over 3 years and an exercise price of $2.10 per share.

In connection with the November 26, 2018 hire of the Company’s Senior Vice President, General Counsel and Company Secretary, the Company granted as an inducement award 350,000 options to purchase Common Stock with ratable annual vesting over 3 years and an exercise price of $2.07 per share.

Each of the inducement equity awards issued during the six months ended December 31, 2018 are subject to and governed by the terms and conditions of the 2016 Plan and the stock options have a 10-year

term. During the six months ended December 31, 2018, a total of 402,500 options vested.

	Number of options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding at July 1, 2018		1,290,000		$	3.06
Granted		835,000			2.14
Exercised		(162,291	)		1.95
Forfeited		(250,000	)		1.95
Expired		(27,709	)		1.95
Outstanding at December 31, 2018		1,685,000		$	2.89		8.71	$	—
Exercisable at December 31, 2018		425,000		$	3.63		7.71	$	—

	Six Months Ended December 31,		Year Ended June 30,
	2018		2018		2017
Option life (in years)		6.00		5.50 – 6.00		5.50 – 6.25
Stock volatility		59% – 61%		60% – 62%		70%
Risk-free interest rate		2.81% – 2.94%		2.88% – 2.91%		2.13%
Expected dividends		0.0%		0.0%		0.0%

	Six Months Ended December 31,		Year Ended June 30,
	2018		2018		2017
Weighted-average grant date fair value per share	$	1.24	$	1.14	$	0.84
Total cash received from exercise of stock options		317		—		—
Total intrinsic value of stock options exercised		44		—		—

	Six Months Ended December 31,		Year Ended June 30,
	2018		2018		2017		2016
Compensation expense included in:
Research and development	$	913	$	1,252	$	1,109	$	702
Sales and marketing		325		50		—		—
General and administrative		1,312		1,402		1,347		1,461
	$	2,550	$	2,704	$	2,456	$	2,163

In connection with termination benefits provided to the Company’s former Chief Executive Officer, the vesting of certain options was accelerated in accordance with the terms of the options, the exercise period for all vested options was extended for one year

through September 14, 2017, and all remaining non-vested options were forfeited. Additionally, in connection with the U.K. restructuring, the exercise period of all vested options held by the former U.K. employees was extended through June 30, 2017 and all non-vested options were forfeited. These option modifications and forfeitures were accounted for in the quarter ended September 30, 2016, the net effect of which resulted in an approximate $274,000 increase of stock-based compensation expense included in general and administrative expense and an approximate $35,000 reduction of stock-based compensation expense included in research and development expense for the year ended June 30, 2017 in the table above.

In connection with termination benefits provided to the Company’s former Vice President, Corporate Affairs and General Counsel, the vesting of certain options was accelerated in accordance with the terms of the options, the exercise period for all vested options was extended for eighteen months through June 26, 2018, and all remaining non-vested options were forfeited. The option modification and forfeitures were accounted for in the quarter ended December 31, 2016, the net effect of which resulted in an approximate $104,000 reduction of stock-based compensation expense included in general and administrative expense for the year ended June 30, 2017 in the table above.

In connection with termination benefits provided to the Company’s former EVP & GM, the vesting of certain options was accelerated in accordance with the terms of the options, with an exercise period through December 26, 2018. All remaining non-vested options were forfeited. The option modifications and forfeitures were accounted for in the quarter ended September 30, 2018, the net effect of which resulted in a $171,000 increase of stock-based compensation expense included in sales and marketing for the six months ended December 31, 2018 in the table above.

At December 31, 2018, there was approximately $4.4 million of unrecognized compensation expense related to outstanding equity awards under the 2016 Plan, the 2008 Plan and inducement awards that is expected to be recognized as expense over a weighted-average period of approximately 1.5 years.