9. Stock‑Based Compensation

Our Board of Directors and the requisite stockholders previously approved the 2010 Equity Incentive Plan (the 2010 Plan). In October 2013, our Board of Directors approved the 2013 Equity Incentive Plan (the 2013 Plan) and in November 2013 our stockholders approved the 2013 Plan. The 2013 Plan became effective as of December 3, 2013, the date of the Company’s IPO. As of December 2, 2013, we suspended the 2010 Plan and no additional awards may be granted under the 2010 Plan. Any shares of common stock covered by awards granted under the Prior Plans that terminate after December 2, 2013 by expiration, forfeiture, cancellation or other means without the issuance of such shares will be added to the 2013 Plan reserve.

As of December 31, 2015, the total number of shares of common stock available for issuance under the 2013 Plan was 6,326,415, which includes 2,684,456 of common stock that were available for issuance under the 2010 Plan as of the effective date of the 2013 Plan. Unless otherwise determined by the Board, beginning January 1, 2014, and continuing until the expiration of the 2013 Plan, the total number of shares of common stock available for issuance under the 2013 Plan will automatically increase annually on January 1 by 4% of the total number of issued and outstanding shares of common stock as of December 31 of the immediate preceding year. On January 1, 2015, the total number of shares of common stock available for issuance under the 2013 Plan was automatically increased by 1,257,371 shares, which number is included in the number of shares available for issuance above. As of December 31, 2015 a total of 2,004,750 options have been issued under the 2013 Plan.

In November 2013, our Board of Directors and stockholders approved the 2013 Employee Stock Purchase Plan (ESPP), which became effective as of December 5, 2013. Under the ESPP our employees may elect to have between 1-15% of their compensation withheld to purchase Company stock at a discount. The ESPP had an initial two-year term that includes four six-month purchase periods and employee withholding amounts may be used to purchase Company stock during each six-month purchase period. The initial two-year term ended in December 2015 and pursuant to the provisions of the ESPP, the second two-year term began automatically upon the end of the initial term. The total number of shares that can be purchased with the withholding amounts are based on the lower of 85% of the Company’s stock price at the initial offering date or, 85% of the Company’s stock price at each purchase date. We have reserved a total of 581,286 shares of common stock for issuance under the ESPP. Unless otherwise determined by our Board, beginning on January 1, 2014, and continuing until the expiration of the ESPP, the total number shares of common stock available for issuance under the ESPP will automatically increase annually on January 1 by the lesser of (i) 1% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year, or (ii) 621,814 shares of common stock. On January 1, 2014, the total number of shares of common stock available for issuance under the ESPP was automatically increased by 313,545 shares, which number is included in the number of shares reserved for issuance above. Pursuant to approval by our board, there was no increase in the number of authorized shares in the ESPP in 2015. As of December 31, 2015, we have issued a total of 176,363 shares of common stock under the ESPP.

Information with respect to stock options outstanding is as follows:


	December 31,
	2015		2014		2013
Exercisable options		1,600,351		1,393,729		1,203,885
Weighted average exercise price per share of exercisable options	$	3.99	$	1.01	$	0.59
Weighted average grant date fair value per share of options granted during the year	$	10.66	$	7.39	$	3.78
Options available for future grants		2,917,182		2,583,186		2,403,368
Weighted average remaining contractual life		6.98		6.43		5.72

The following table summarizes stock option activity for the years ended December 31, 2015 and 2014:


				Weighted-
		Weighted-		Average
		Average		Remaining
		Exercise		Contractual	Aggregate
	Number of	Price		Term	Intrinsic Value
	Shares	(Per Share)(1)		(in years)	(in thousands)(2)
Balances at December 31, 2013	1,794,214	$	1.66	5.72
Options granted	1,049,521		10.99
Options forfeited	(1,000)		10.31
Options exercised(3)	(15,941)		0.59
Balances at December 31, 2014	2,826,794		5.12	6.43	$	30,863
Options granted	940,250		15.94
Options forfeited	(9,375)		18.75
Options expired	(7,500)		11.46
Options exercised(3)	(379,268)		1.46
Balances at December 31, 2015	3,370,901	$	8.50	6.98	$	21,854
As of December 31, 2015
Options vested and expected to vest	3,064,829	$	8.09	6.81	$	21,048
Exercisable	1,600,351	$	3.99	5.10	$	17,016

(1)

The weighted average exercise price per share is determined using exercise price per share for stock options.

(2)

The aggregate intrinsic value is calculated as the difference between the exercise price of the option and the fair value of our common stock for in‑ the‑money options at December 31, 2015 and 2014.

(3)

The total intrinsic value of stock options exercised was $5.4 million, $155,000 and $191,000 for the years ended December 31, 2015, 2014 and 2013 respectively. The stock options outstanding and exercisable by exercise price at December 31, 2015 are as follows:


Stock Options Outstanding					Stock Options Exercisable
		Weighted-
		Average
		Remaining	Weighted-			Weighted-
Range of		Contractual	Average			Average
Exercise	Number of	Term	Exercise Price		Number of	Exercise Price
Prices	Shares	(in years)	Per Share		Shares	Per Share
$0.59 - $4.25	1,413,261	4.60	$	1.87	1,163,519	$	1.38
$5.50 - $8.56	50,000	7.59	$	7.64	20,808	$	7.09
$9.26 – $14.38	1,026,140	8.33	$	11.2	415,899	$	11.11
$14.54 – $22.35	881,500	9.18	$	16.0	125	$	16.52
	3,370,901	6.98	$	8.50	1,600,351	$	3.99

We estimated the fair value of employee and non‑employee awards using the Black‑Scholes valuation model. The fair value of employee stock options is being amortized on a straight‑line basis over the requisite service period of the awards. Management estimates the probability of non‑employee awards being vested based upon an evaluation of the non‑employee achieving their specific performance goals.

Options granted after our Initial Public Offering, are issued at the fair market value of our stock at the date the grant is approved by our board of directors.

The fair value of employee stock options was estimated using the following weighted average assumptions for the years ended December 31, 2015, 2014 and 2013:


	Options
	2015		2014		2013
Common stock fair value per share	$	11.82 - 22.35	$	8.56 - 16.52	$	5.50
Expected volatility		69.17% - 86.46%		77.4%		86.7%
Risk-free interest rate		1.44% - 1.84%		1.67% - 1.96%		0.9% – 2.1%
Expected dividend yield		—		—		—
Expected term (in years)		5.23 - 6.08		6.0		6.0


	ESPP
	2015	2014	2013
Expected term (years)	0.5 - 2.0	0.5 - 2.0	—
Expected volatility	67.8% - 82.9%	70.6% - 71.8%	—
Risk-free interest rate	.07% - .93%	.06% - .46%	—
Expected dividend yield	—	—	—

Total employee, director and non‑employee stock‑based compensation expense recognized was as follows:


	Year Ended
	December 31,
(In thousands)	2015		2014		2013
General and administrative	$	2,218	$	848	$	40
Research and development		2,650		1,013		158
	$	4,869	$	1,861	$	198

The expected term of stock options represents the average period the stock options are expected to remain outstanding. The expected stock price volatility for our stock options for the years ended December 31, 2015, 2014 and 2013 was determined by examining the historical volatilities for industry peers and adjusting for differences in our life cycle and financing leverage. Industry peers consist of several public companies in the biopharmaceutical industry.

We determined the average expected life of stock options based on the simplified method because our common stock has not been publicly traded for an extended period and we do not have a track record of establishing the volatility.

The risk‑free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of our stock options.

The expected dividend assumption is based on our history and expectation of dividend payouts.

As of December 31, 2015 and 2014, the unamortized compensation expense related to unvested stock options was $10.8 million and $7.6 million, respectively. The remaining unamortized compensation expense will be recognized over the next 2.74 years. At December 31, 2015 and 2014, the unamortized compensation expense was $395,000 and $204,000 respectively under our ESPP.