Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

2017 Equity Incentive Plan

On December 29, 2017, the 2017 Equity Incentive Plan was approved by the stockholders of the Company, which provided for the issuance of up to a maximum of 24,204 shares of common stock underlying stock options granted prior to September 10, 2019. The 2017 Equity Incentive Plan was terminated upon the approval of the 2019 Incentive Plan subject to outstanding stock options granted under the 2017 Equity Incentive Plan that remain exercisable through maturity for the Company's employees and directors.

2019 Equity Incentive Plan

On September 10, 2019, the 2019 Equity Incentive Plan was approved by the stockholders of the Company, which currently allows for issuance of up to (i) 454,005 shares of common stock in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate plus (ii) 2,684 shares of common stock under the 2017 Equity Incentive Plan that were forfeited back to the Company subsequent to September 10, 2019 and are available for future issuance.

The number of shares reserved for issuance under the 2019 Equity Incentive Plan will automatically increase on January 1 of each year, for a period of not more than four years, commencing on January 1, 2020 and ending on (and including) January 1, 2023, by an amount equal to the lesser of (i) 5% of the total number of shares of common stock outstanding at the end of the prior fiscal year; and (ii) an amount determined by the board of directors or authorized committee. As of September 30, 2020, 100,689 shares of common stock were reserved for future grants under the 2019 Equity Incentive Plan.

The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019, respectively (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	5	$	(1)	$	10	$	(4)
General and administrative	141		116		427		430
Total stock-based compensation	$	146	$	115	$	437	$	426

Options to Purchase Shares of Common Stock

The Company uses the Black-Scholes option-pricing model to determine the fair value of all its stock options granted. The assumptions used during the nine months ended September 30, 2020 and 2019, respectively, were as follows:


	Nine Months Ended September 30,
		2020		2019
Risk free interest rate		0.62	%	2.49	%
Volatility		106.24	%	96.57	%
Expected lives (years)		6.15		6.20
Expected dividend yield		—	%	—	%

There were no options granted during the three months ended September 30, 2020 and 2019. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2020 and 2019 was $1.53 and $54.00, 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, 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 approximately 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 accounts for forfeitures as they occur.

As of September 30, 2020, there was $0.8 million 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 2.12 years.

The following table summarizes stock option activity of the Company for the nine months ended September 30, 2020:


	Total Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2019	21,520	$	112.81	8.98	$	—
Granted	186,000	1.87			$	—


Outstanding at September 30, 2020	207,520	$	13.38	9.33	$	145
Options exercisable at September 30, 2020	10,892	$	129.19	8.16	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at September 30, 2020 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on September 30, 2020 of $2.65 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.

RSUs with Performance and Service Conditions

The Company granted RSUs subject to both performance-based and service-based vesting conditions to certain of its employees pursuant to the Company's 2019 Equity Incentive Plan that will settle in shares of common stock. These RSUs vest based on the achievement of certain clinical and regulatory milestones and the respective employee's continued employment with the Company. As of September 30, 2020, there was $0.3 million of unrecognized compensation cost related to outstanding RSUs.

The following table summarizes RSU activity of the Company for the nine months ended September 30, 2020:


	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2019	—	$	—
Granted	170,000	$	1.89
Vested	—	$	—
Unvested at September 30, 2020	170,000	$	1.89