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Stock Based Compensation
 6 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Based Compensation
Stock-Based Compensation

Options to Purchase Shares of Common Stock

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2017 and 2016, respectively (in thousands):

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Research and development
$
35

 
$
108

 
$
73

 
$
235

General and administrative
162

 
514

 
352

 
1,043

Total stock-based compensation from continuing operations
$
197

 
$
622

 
$
425

 
$
1,278



The Company uses the Black-Scholes option-pricing model and the following weighted-average assumptions to determine the fair value of all its stock options granted:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2015*
 
2017
 
2016
Risk free interest rate
1.58
%
 
1.41
%
 
1.87
%
 
1.41
%
Volatility
132.13
%
 
76.30
%
 
116.41
%
 
75.63
%
Expected lives (years)
5.50

 
6.25

 
5.92

 
6.25

Expected dividend yield
—
%
 
—
%
 
—
%
 
—
%


The weighted-average grant date fair value of options granted during the three and six months ended June 30, 2017 were $0.54 per share and $1.15 per share, respectively.

The Company’s expected common stock price volatility assumption is based upon the Company's own implied volatility in combination with the implied volatility of a basket of comparable companies. The expected life assumptions for employee grants were based upon the simplified method provided for under ASC 718-10, which averages the contractual term of the Company’s options of ten years with the average vesting term of four years for an average of six years. The expected life assumptions for non-employees were based upon the contractual term of the option. The dividend yield assumption is zero, because the Company has never paid cash dividends and presently has no intention to do so. The risk-free interest rate used for each grant was also based upon prevailing short-term interest rates. The Company has estimated an annualized forfeiture rate of 15% for options granted to its employees, 8% for options granted to senior management and zero for non-employee directors. The Company will record additional expense if the actual forfeitures are lower than estimated and will record a recovery of prior expense if the actual forfeiture rates are higher than estimated.

As of June 30, 2017, there was $713,000 of unrecognized compensation cost related to outstanding stock options that is expected to be recognized as a component of the Company’s operating expenses over a weighted-average period of 2.30 years.

As of June 30, 2017, an aggregate of 1,325,000 shares of common stock were reserved for issuance under the Company’s 2016 Incentive Plan, including 505,000 shares subject to outstanding common stock options granted under the plan. There are 466,000 shares available for future grants based on adjustments in the 2016 Incentive Plan. The administrator of the plan determines the terms when a stock option may become exercisable. Vesting periods of stock options granted to date have not exceeded four years. The stock options will expire, unless previously exercised, no later than ten years from the grant date.

The following table summarizes stock option activity of the Company for the six months ended June 30, 2017:

 
Total
Number of
Shares
(In Thousands)
 
Weighted
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
(In Thousands)
Outstanding at January 1, 2017
561

 
$
41.50

 


Granted
105

 
1.30

 


Exercised
—

 
—

 
$
—

Canceled
(161
)
 
34.21

 
$
—

Outstanding at June 30, 2017
505

 
$
35.49

 
$
—

Options exercisable at June 30, 2017
300

 
$
54.15

 
$
—



The aggregate intrinsic values of outstanding and exercisable stock options at June 30, 2017 were calculated based on the closing price of the Company’s common stock as reported on The NASDAQ Capital Market on June 30, 2017 of $0.58 per share. The aggregate intrinsic value equals the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying stock options.