6. Share-based Compensation

The Company uses equity-based compensation programs to provide long-term performance incentives for its employees. These incentives consist primarily of stock options and restricted stock units (“RSUs”).

MEI Pharma’s 2008 Stock Omnibus Equity Compensation Plan (the “2008 Equity Plan”) provides for the grant of options and/or other share-based or share-denominated awards to the Company’s non-employee directors, officers, employees and advisors. The 2008 Equity Plan was initially adopted in 2008 and was amended and restated in 2011 and 2012. Effective December 3, 2014, the Company’s stockholders voted to further amend and restate the 2008 Equity Plan to increase the number of shares of common stock authorized for issuance under the plan to 3,936,000 shares, and to increase the maximum term of stock options from five years to ten years, among other changes. As of September 30, 2015, there were 916,666 shares available for future grant under the 2008 Equity Plan.

Total share-based compensation expense for all stock awards consists of the following, in thousands:


	Three Months Ended September 30,
	2015		2014
Research and development	$	208	$	415
General and administrative		562		995

Total share-based compensation	$	770	$	1,410

Stock Options

As of September 30, 2015, there were a total of 2,648,937 options outstanding, including options representing the right to purchase a total of 29,603 shares of common stock which were granted to one of the Company’s officers outside of the Plan.

Stock option activity for the three months ended September 30, 2015 was as follows:


	Number of Options			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 30, 2015		1,614,317		$	7.07
Granted		1,185,962			1.62
Forfeited / Cancelled		(137,637	)		6.55
Expired		(13,705	)		4.62

Outstanding at September 30, 2015		2,648,937		$	4.67		6.2	$	—

Vested and exercisable at September 30, 2015		815,872		$	6.84		3.4	$	—

The fair value of each stock option granted during the three months ended September 30, 2015 is estimated on the grant date under the fair value method using a Black-Scholes valuation model. Stock options granted to employees during the three months ended September 30, 2015 vest either ratably each month for a period of 36 months, or 25% one year from the date of grant and ratably each month thereafter for a period of 36 months and expire ten years from the date of grant. Stock options granted to directors during the three months ended September 30, 2015 vest ratably each month for a period of 12 months from the date of grant and expire ten years from the date of grant. The RSU equity awards are measured using the grant date fair value of the Company’s common stock. The estimated fair values of the stock options and RSUs, including the effect of estimated forfeitures, are expensed over the service period.

The following weighted-average assumptions were used to determine the fair value of options granted during the period:


	Three Months Ended September 30,
	2015			2014
Risk-free interest rate		1.8	%		1.7	%
Expected life (years)		5.7			5.0
Expected volatility		117.4	%		117.0	%
Dividend yield		0.0	%		0.0	%
Weighted-average grant date fair value	$	1.38		$	5.15

As of September 30, 2015, the Company expects all outstanding options to vest. As of September 30, 2015, there was $2.8 million of unrecognized compensation expense related to the unvested portion of stock options. Such compensation expense is expected to be recognized over a weighted-average period of 1.5 years.

Restricted Stock Units

In March 2013, the Compensation Committee of the Board of Directors granted 400,000 RSUs to the Company’s Chief Executive Officer, Dr. Daniel P. Gold. Each RSU represents the contingent right to receive one share of the Company’s common stock. One-third of the RSUs vested on August 30, 2014, one-third vested on August 30, 2015, and the remaining one-third will vest on August 30, 2016. The shares underlying the RSUs will be delivered to Dr. Gold on the earliest to occur of (i) March 29, 2018, (ii) Dr. Gold’s death, disability or separation from service from the Company for any reason, or (iii) a change in control involving the Company.

The fair value of the RSUs on the date of grant was $3.5 million. The grant date fair value per unit was $8.63. As of September 30, 2015, unrecognized compensation expense related to the unvested portion of the Company’s RSUs was approximately $0.3 million and is expected to be recognized over a weighted-average period of 0.9 years.