8. Stockholders’ Equity

Common Stock

At-The-Market Equity Offerings

On March 1, 2016, the Company entered into an at-the-market sales agreement with Cowen and Company, LLC to sell the Company’s securities under a shelf registration statement filed in March 2015. As of December 31, 2016, the Company had issued and sold 668,791 shares of common stock under the at-the-market sales agreement. The shares were sold at a weighted average price per share of $6.336, for aggregate net proceeds of $3.9 million, after deducting commissions and offering expenses. During the period from January 1, 2017 through May 23, 2017, the Company issued and sold an additional 1,388,647 shares of common stock under the at-the-market sales agreement. The shares were sold at a weighted average price per share of $5.55, for aggregate net proceeds of $7.4 million, after deducting commissions and offering expenses. The at-the market sales agreement was terminated on May 23, 2017.

On September 28, 2017, the Company entered into a new at-the-market sales agreement with Cowen and Company, LLC to sell the Company’s securities under a shelf registration statement filed in September 2017. As of December 31, 2017, the Company had issued and sold 1,600,000 shares of common stock under the at-the-market sales agreement. The shares were sold at a weighted average price per share of $12.50, for aggregate net proceeds of $19.3 million, after deducting commissions and offering expenses. As of December 31, 2017, $80.0 million remained available to be sold under the terms of the September 2017 at-the-market sales agreement.

Public Offerings of Common Stock

In June 2016, the Company completed a public offering in which the Company sold 3,476,793 shares of its common stock at a price of $6.10 per share. The Company received net proceeds of $19.7 million from this offering, after deducting underwriting discounts, commissions and other offering expenses.

In May 2017, the Company completed a public offering in which the Company sold 8,050,000 shares of its common stock at a price to the public of $11.50 per share. The Company received net proceeds of $86.8 million from this offering, after deducting underwriting discounts, commissions and other offering expenses.

Warrants to Acquire Company Stock

The following common stock warrants were outstanding as of each of December 31, 2017 and 2016:



Number of Shares	Exercise
Underlying Outstanding	Price		Expiration
Warrants	Per Share		Date
236,632	$	0.33	July 18, 2018
301,986		0.33	January 16, 2019
15,250		0.33	January 30, 2019

For the year ended December 31, 2017, no warrants were exercised or expired. For the year ended December 31, 2016, a total of 23,275 warrants were exercised at a weighted average exercise price of $0.33 per share. For the year ended December 31, 2015, a total of 11,908 warrants were exercised at a weighted average exercise price of $0.33 per share. For the year ended December 31, 2016, a total of 1,544 warrants expired. No warrants expired during the year ended December 31, 2015.

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 year ended December 31, 2017 is as follows:



				Weighted-Average
				Remaining	Aggregate
	Outstanding	Weighted-Average		Contractual Term	Intrinsic Value
	Options	Exercise Price		(Years)	(In thousands)
Outstanding as of December 31, 2016	729,819	$	1.26	3.2
Options exercised	(16,608)		1.65
Options forfeited	—		—
Outstanding as of December 31, 2017	713,211		1.25	2.2	$	11,086
Vested as of December 31, 2017	713,211		1.25	2.2	$	11,086
Exercisable as of December 31, 2017	713,211		1.25	2.2	$	11,086

During 2017, 2016 and 2015 the Company issued 16,608, 28,368 and 99,029 shares of common stock, respectively, in conjunction with exercises of stock options granted under the 2003 Plan. The Company received cash proceeds from the exercise of these stock options of approximately to $27,357, $44,771 and $114,124 during 2017, 2016 and 2015, respectively. Total intrinsic value of the options exercised during the years ended December 31, 2017, 2016 and 2015 was $103,638, $97,707 and $667,258, respectively.

As of December 31, 2017, the options under the 2003 Plan were fully expensed. The total fair value of shares vested in the years ended December 31, 2017, 2016 and 2015, was $1,573, $16,024 and $50,310, respectively. There were no options granted from this plan in 2017, 2016 or 2015.

2013 Equity Incentive Plan

The Company’s board of directors adopted, and its stockholders approved, its 2013 Equity Incentive Plan (the 2013 Plan) effective on January 9, 2014. 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 was 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, 2018, the number of shares of common stock that may be issued under the 2013 Plan was automatically increased by 1,030,793 shares, representing 3% of the total number of shares of common stock outstanding on January 1, 2017, increasing the number of shares of common stock available for issuance under the 2013 Plan to 3,867,994 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 year ended December 31, 2017 is as follows:


					WEIGHTED-
			WEIGHTED-		AVERAGE	AGGREGATE
			AVERAGE		REMAINING	INTRINSIC
	OUTSTANDING		EXERCISE		CONTRACTUAL	VALUE (IN
	OPTIONS		PRICE		TERM(YEARS)	THOUSANDS)
Outstanding as of December 31, 2016		2,066,105	$	7.41	7.9
Options granted		674,738		7.03
Options exercised		(54,521)		6.35
Options forfeited		(22,159)		7.35
Outstanding as of December 31, 2017		2,664,163		7.34	7.4	$	25,091
Vested or expected to vest as of December 31, 2017		2,664,163		7.34	7.4	$	25,091
Exercisable as of December 31, 2017		1,569,935		7.81	6.5	$	14,079

The weighted-average fair value of the options granted during the year of December 31, 2017, 2016 and 2015 was $4.76, $3.39 and $5.08 per share, respectively, applying the Black-Scholes-Merton option pricing model utilizing the following weighted-average assumptions:


	2017	2016	2015
Expected term	6.25 years	6.25 years	6.25 years
Expected volatility	75.20%	68.98%	80.76%
Risk-free interest rate	2.08%	1.70%	1.70%
Expected dividend yield	0%	0%	0%

As of December 31, 2017, there was $3,935,996 of total unrecognized compensation expense related to unvested options that will be recognized over a weighted-average period of approximately 2.2 years. The total fair value of shares vested in the years ended December 31, 2017, December 31, 2016 and December 31, 2015 was $3,506,568, $3,053,086 and $2,668,712, respectively. During the years ended December 31, 2017 and December 31, 2016, the Company received cash of $346,019 and $27,825, respectively and issued 54,521 and 3,500 shares of common stock, respectively, in conjunction with exercises of stock options granted under the 2013 Plan. The intrinsic value of the options exercised for the years ended December 31, 2017 and 2016 was $385,701 and $2,275, respectively. There were no option exercises under the 2013 Plan for the year ended December 31, 2015.

An 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 December 31, 2017, $23,380 of unrecognized compensation costs related to unvested service.

The following is a summary of RSU activity for the 2013 Plan for the year ended December 31, 2017:



			Weighted-Average
		Number	Grant Date
	of Shares			Fair Value
Unvested at December 31, 2016		16,916	$	5.04
Granted		—		—
Forfeited		—		—
Vested		7,249		5.61
Unvested at December 31, 2017		9,667		4.61

Stock-based compensation expense was classified as follows on the statement of operations for the years ended December 31:



	2017		2016		2015
Research and development expense	$	1,280,909	$	1,033,005	$	802,329
General and administrative expense		2,479,893		1,931,762		1,521,274
Total stock-based compensation expense	$	3,760,802	$	2,964,767	$	2,323,603