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Stockholders' Equity
 3 Months Ended
Mar. 31, 2015
Equity [Abstract]  
Stockholders' Equity

7. Stockholders’ Equity

Warrants to Acquire Company Stock

On October 13, 2006, the Company issued a warrant to purchase 1,544 shares of common stock at an exercise price of $25.92 per share to a commercial bank. This warrant, which was originally issuable for Series B Preferred Stock prior to the conversion of Series B Preferred Stock to common stock in 2009, was vested upon issuance and expires in October 2016. The fair value of the warrant, which was de minimis, was calculated using the Black-Scholes-Merton option pricing model.

As part of the issuance of convertible unsecured promissory notes, the Company issued warrants to purchase an aggregate of 633,709 shares of common stock.

There were no warrants exercised or expired during the three months ended March 31, 2015. The following common stock warrants were outstanding at March 31, 2015:

 

NUMBER OF SHARES

    EXERCISE
PRICE
PER SHARE		      EXPIRATION
DATE

259,907

    $ 0.33       July 18, 2018

301,986

      0.33       January 16, 2019

11,908

      0.33       December 9, 2015

15,250

      0.33       January 30, 2019

1,544

      25.92       October 13, 2016

2003 Stock Incentive Plan

The 2003 Stock Incentive Plan (the 2003 Plan) provided for the grant of incentives and nonqualified stock options and restricted stock awards. The exercise price for incentive stock options must be at least equal to the fair value of the common stock on the grant date. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant will vest upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighth of the option shares per month as of the first day of each month after the first anniversary. Upon termination of employment by reasons other than death, cause, or disability, any vested options shall terminate 60 days after the termination date. Stock options terminate 10 years from the date of grant. The 2003 Plan expired on May 21, 2013.

 

A summary of the Company’s stock option activity under the 2003 Plan for the three months ended March 31, 2015 is as follows:

 

     OUTSTANDING
OPTIONS		      WEIGHTED-
AVERAGE
EXERCISE
PRICE		      WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
TERM (YEARS)		      AGGREGATE
INTRINSIC
VALUE (IN
THOUSANDS)		  

Outstanding as of December 31, 2014

      857,391       $ 1.26         5.20       $ 5,096   

Options granted

      —             

Options exercised

      (67,295 )       1.12         

Options forfeited

      —             
  

 

 

           

Outstanding as of March 31, 2015

   790,096      1.27      4.98      5,572   
  

 

 

           

Vested or expected to vest as of March 31, 2015

   789,113      1.27      4.98      5,566   
  

 

 

           

Exercisable as of March 31, 2015

   757,897      1.23      4.89      5,376   
  

 

 

           

As of March 31, 2015, there was $52,640 of total unrecognized compensation expense related to unvested options under the 2003 Plan that will be recognized over a weighted-average period less than one year. Total intrinsic value of the options exercised during the three months ended March 31, 2015 was $473,016. There were no options exercised during the quarter ended March 31, 2014. The total fair value of shares underlying options which vested in the three months ended March 31, 2015 and 2014 was $13,785 and $17,825, respectively.

2013 Equity Incentive Plan

The Company’s board of directors adopted, and its stockholders approved, its 2013 Equity Incentive Plan (the 2013 Plan). The 2013 Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code (the Code), to the Company’s employees and its parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to its employees, including officers, consultants and directors. The 2013 Plan also provides for the grant of performance cash awards to the Company’s employees, consultants and directors. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant will typically vest upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighth of the option shares per month as of the first day of each month after the first anniversary. Upon termination of employment by reasons other than death, cause, or disability, any vested options shall terminate 90 days after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant.

Authorized Shares

The maximum number of shares of common stock that may be issued under the 2013 Plan is 1,000,000 shares, plus any shares subject to stock options or similar awards granted under the 2003 Plan that expire or terminate without having been exercised in full or are forfeited to or repurchased by the Company. The number of shares of common stock reserved for issuance under the 2013 Plan will automatically increase on January 1 of each year, beginning on January 1, 2015 and ending on January 1, 2023, by 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. The maximum number of shares that may be issued pursuant to exercise of incentive stock options under the 2013 Plan is 20,000,000. As of January 1, 2015, the number of shares of common stock that may be issued under the 2013 Plan was automatically increased by 568,195 shares, representing 3% of the total number of shares of common stock outstanding on January 1, 2015, increasing the number of shares of common stock available for issuance under the 2013 Plan to 1,568,195 shares.

Shares issued under the 2013 Plan may be authorized but unissued or reacquired shares of common stock. Shares subject to stock awards granted under the 2013 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of shares available for issuance under the 2013 Plan. Additionally, shares issued pursuant to stock awards under the 2013 Plan that the Company repurchases or that are forfeited, as well as shares reacquired by the Company as consideration for the exercise or purchase price of a stock award or to satisfy tax withholding obligations related to a stock award, will become available for future grant under the 2013 Plan.

 

A summary of the Company’s stock option activity under the 2013 Plan for the three months ended March 31, 2015 is as follows:

 

     OUTSTANDING
OPTIONS		      WEIGHTED-
AVERAGE
EXERCISE
PRICE		      WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
TERM (YEARS)		      AGGREGATE
INTRINSIC
VALUE (IN
THOUSANDS)		  

Outstanding as of December 31, 2014

      949,589      $ 8.88         9.09      $ 12  

Options granted

      485,900        7.18         

Options exercised

      —             

Options forfeited

      —             
  

 

 

           

Outstanding as of March 31, 2015

   1,435,489      8.30      9.16      851   
  

 

 

           

Vested or expected to vest as of March 31, 2015

   1,427,558      8.30      9.16      845   
  

 

 

           

Exercisable as of March 31, 2015

   203,631      8.03      8.78      65   
  

 

 

           

The weighted-average fair value of the options granted during the three months ended March 31, 2015 and 2014 was $5.10 per share and $6.13 per share, respectively, applying the Black-Scholes-Merton option pricing model utilizing the following weighted-average assumptions:

 

     Three Months Ended
March 31, 2015		     Three Months Ended
March 31, 2014		  

Expected term (years)

      6.25        6.25   

Expected volatility

      82.08 %      91.91 % 

Risk-free interest rate

      1.68 %      2.16 % 

Expected dividend yield

      0 %      0 % 

As of March 31, 2015, there was $6,635,271 of total unrecognized compensation expense related to unvested options under the 2013 Plan that will be recognized over a weighted-average period of approximately 3.0 years. The total fair value of shares underlying options which vested in the three months ended March 31, 2015 and 2014 was $1,252,769 and $0, respectively.

A restricted stock unit (RSU) is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s stock on the date of grant. The Company has granted RSUs with service conditions (service RSUs) that vest in three equal annual installments, provided that the employee remains employed with the Company. As of March 31, 2015, there was $46,602 of unrecognized compensation costs related to unvested service RSUs.

The following is a summary of RSU activity under the 2013 Plan for the three months ended March 31, 2015:

 

     NUMBER OF
SHARES		      WEIGHTED-
AVERAGE
GRANT DATE
FAIR VALUE		  

Unvested at December 31, 2014

      7,250       $ 7.62   

Granted

      —          —    

Forfeited

      —          —    

Vested

      —          —    
  

 

 

     

 

 

  

Unvested at March 31, 2015

   7,250      7.62   

 

Stock-based compensation expense was classified as follows on the statement of operations for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended
March 31,		  
     2015      2014  

Research and development

    $ 202,907       $ 91,467   

General and administrative expense

      384,607         200,749   
  

 

 

     

 

 

  

Total

 $ 587,514    $ 292,216