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Stock-based Compensation | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock-based Compensation |
11. | Stock-based Compensation
2009 Stock Option Plan The Company had a share-based compensation plan (the “2009 Stock Option Plan”) under which the Company granted options to purchase shares of common stock to employees, directors, and consultants as either incentive stock options or nonqualified stock options. Incentive stock options could be granted with exercise prices not less than 100% to 110% of the fair market value of the common stock. Options granted under the plan generally vest over three to four years and expire in 10 years from the date of grant. 2014 Equity Incentive Plan In February 2014, the Company’s board of directors adopted the 2014 Equity Incentive Plan (“2014 Plan”), which was subsequently ratified by its stockholders and became effective on May 2, 2014 (the “Effective Date”). The 2014 Plan, as amended on June 18, 2014 and February 25, 2015, is the successor to and continuation of the 2009 Stock Option Plan. As of the Effective Date, no additional awards will be granted under the 2009 Stock Option Plan, but all stock awards granted under the 2009 Stock Option Plan prior to the Effective Date will remain subject to the terms of the 2009 Stock Option Plan. All awards granted on and after the Effective Date will be subject to the terms of the 2014 Plan. The 2014 Plan provides for the grant of the following awards: (i) incentive stock options, (ii) nonstatutory stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards, and (vi) other stock awards. Employees, directors, and consultants are eligible to receive awards. Options granted under the plan generally vest over three to four years and expire in 10 years from the date of grant. Under the 2014 Plan, after giving effect to the increases to the share reserve approved by the Company’s stockholders in September 2014, and June 2015, but excluding the automatic increases discussed below, the aggregate number of shares of common stock that could be issued from and after the Effective Date (the “share reserve”) could not exceed the sum of (i) 1,122,731 new shares, (ii) the shares that represented the 2009 Stock Option Plan’s available reserve on the Effective Date, and (iii) any returning shares from the 2009 Stock Option Plan. Under the 2014 Plan, the share reserve will automatically increase on January 1st of each year, for a period of not more than 10 years, commencing on January 1, 2015, and ending on January 1, 2024, in an amount equal to 4.0% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year. The board of directors may act prior to January 1st of a given year to provide that there will be no increase in the share reserve or that the increase will be a lesser number of shares than would otherwise occur. Pursuant to the terms of the 2014 Plan, on January 1, 2019 and 2018, the Company automatically added 1,918,879 and 1,158,866 shares to the total number shares of common stock available for future issuance under the 2014 Plan, respectively. As of December 31, 2019, there were 554,774 shares of common stock available for future issuance under the 2014 Plan. 2015 Inducement Plan On March 26, 2015, the Company's board of directors adopted the 2015 Inducement Plan ("2015 Plan"). The 2015 Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other forms of equity compensation (collectively, stock awards), all of which may be granted to persons not previously employees or directors of the Company, or following a bona fide period of non-employment, as an inducement material to the individuals’ entering into employment with the Company within the meaning of NASDAQ Listing Rule 5635(c)(4). The 2015 Plan had an initial share reserve covering 450,000 shares of common stock. On June 9, 2019, the Company’s board of directors amended the 2015 Plan, and the initial share reserve for the 2015 Plan was increased from 450,000 to 900,000 shares of common stock. During the year ended December 31, 2019, there were 115,000 granted options of the Company's common stock under the 2015 Plan. As of December 31, 2019, there were 315,500 shares of common stock available for future issuance under the 2015 Plan. During the year ended December 31, 2018, there were no granted options of the Company’s common stock under the 2015 Plan. As of December 31, 2018, there were 5,000 shares of common stock available for future issuance under the 2015 Plan. Option Valuation Method The fair value of a stock option is estimated using an option-pricing model that takes into account as of the grant date the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock, and the risk-free interest rate for the expected term of the option. The Company has used the simplified method in calculating the expected term of all option grants based on the vesting period. Compensation costs related to share-based payment transactions are recognized in the financial statements upon satisfaction of the requisite service or vesting requirements and forfeitures are recorded as incurred. The Company has elected to use the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable rather than for use in estimating the fair value of stock options subject to vesting and transferability restrictions. Using the Black-Scholes option-pricing model, the weighted-average fair value of options granted during 2019 and 2018 was $0.75 and $0.90 per option, respectively. The aggregate fair value of options granted during 2019 and 2018 was $1.3 million and $1.1 million, respectively. The assumptions used to estimate fair value and the resulting grant date fair values are as follows:
|  | Employees |  |  | Non-employee Directors |
|  | Years Ended December 31, |  |  | Years Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Weighted average expected volatility |  |  | 66.47 | % |  |  | 52.31 | % |  |  | 65.36 | % |  |  | 58.65 | %
Weighted average risk-free interest rate |  |  | 2.47 | % |  |  | 2.64 | % |  |  | 2.11 | % |  |  | 2.44 | %
Weighted average expected term (in years) |  |  | 6.03 |  |  |  | 6.02 |  |  |  | 5.54 |  |  |  | 5.28 |
The activity for the 2009 Plan, 2014 Plan and 2015 Plan for the years ended December 31, 2019 is summarized as follows:
|  | Number of Shares |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Life (in years) |  |  | Aggregate Intrinsic Value ($000) |
Outstanding — January 1, 2019 |  |  | 4,052,913 |  |  | $ | 4.37 |  |  |  | 7.23 |  |  | $ | — |
Granted |  |  | 1,701,500 |  |  |  | 1.24 |  |  |  |  |  |  |  |  |
Exercised |  |  | (22,500 | ) |  |  | 0.54 |  |  |  |  |  |  |  |  |
Forfeited/expired |  |  | (470,053 | ) |  |  | 7.96 |  |  |  |  |  |  |  |  |
Outstanding — December 31, 2019 |  |  | 5,261,860 |  |  | $ | 3.06 |  |  |  | 7.62 |  |  | $ | 60 |
Exercisable — December 31, 2019 |  |  | 2,988,580 |  |  | $ | 4.17 |  |  |  | 6.83 |  |  | $ | 33 |
Vested or expected to vest —December 31, 2019 |  |  | 5,261,860 |  |  | $ | 3.06 |  |  |  | 7.62 |  |  | $ | 60 |
The intrinsic values in the table above represent the total intrinsic value (the difference between the Company’s closing stock price as of December 31, 2019, and the exercise price multiplied by the number of options). The total fair value of shares vested during the years ended December 31, 2019 and 2018 was $1.5 million and $1.8 million, respectively. As of December 31, 2019, there was approximately $1.8 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the plan. That cost is expected to be recognized over a weighted-average period of 2.1 years. Restricted stock unit ("RSU") activity under the 2014 Plan and 2015 Plan for the years ended December 31, 2019, is summarized as follows:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value Per Share |
Non-vested at December 31, 2018 |  |  | 111,891 |  |  | $ | 2.06 |
Granted |  |  | 932,500 |  |  |  | 1.37 |
Vested |  |  | (29,673 | ) |  |  | 2.14 |
Forfeited |  |  | (48,324 | ) |  |  | 1.46 |
Non-vested at December 31, 2019 |  |  | 966,394 |  |  | $ | 1.42 |
The fair value of RSUs is based on the market price of the Company's common stock on the date of grant. RSUs generally vest 25% annually over a four year period from the date of grant. Upon vesting, the RSUs are net share settled to cover the required withholding tax with the remaining shares issued to the holder. The Company recognizes compensation expense for such awards ratably over the corresponding vesting period. As of December 31, 2019, there was approximately $1.1 million of total unrecognized compensation cost related to unvested RSU share-based compensation. That cost is expected to be recognized over a weighted-average period of 3.0 years. 2014 Employee Stock Purchase Plan In February 2014, the Company’s board of directors adopted the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which was subsequently ratified by the Company’s stockholders and became effective on May 2, 2014. The purpose of the 2014 ESPP is to provide means by which eligible employees of the Company and of certain designated related corporations may be given an opportunity to purchase shares of the Company’s common stock, and to seek and retain services of new and existing employees and to provide incentives for such persons to exert maximum efforts for the success of the Company. Common stock that may be issued under the 2014 ESPP will not exceed 47,794 shares, plus the number of shares of common stock that are automatically added on January 1st of each year for a period of ten years, commencing on January 1, 2015 and ending on January 1, 2024, in an amount equal to the lesser of (i) 0.8% of the total number of shares of outstanding common stock on December 31 of the preceding calendar year, and (ii) 29,411 shares of common stock. Similar to the 2014 Plan, the board of directors may act prior to January 1st of a given year to provide that there will be no increase in the share reserve or that the increase will be a lesser number of shares than would otherwise occur. The 2014 ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. During the years ended December 31, 2019 and 2018, the Company issued 36,847 and 31,361 shares of common stock under the 2014 ESPP, respectively. During the years ended December 31, 2019 and 2018, the number of shares of common stock available for issuance under the ESPP was automatically increased by 29,411 shares. As of December 31, 2019, there were 74,231 shares of common stock available for future issuance under the 2014 ESPP. Compensation Cost The compensation cost that has been charged against income for stock awards under the 2009 Stock Option Plan, the 2014 Plan, the 2015 Plan, and the 2014 ESPP was $1.8 million for the years ended December 31, 2019 and 2018. The total income tax benefit recognized in the consolidated statements of operations for share-based compensation arrangements was $0 for the years ended December 31, 2019 and 2018, respectively. Cash received from options exercised was $12,000 and $0 for the years ended December 31, 2019 and 2018, respectively. Stock-based compensation expense related to stock options is included in the following line items in the accompanying statements of operations (in thousands):
|  | Years Ended December 31, |
|  | 2019 |  |  | 2018 |
Research and development |  | $ | 604 |  |  | $ | 519 |
Selling, general and administrative |  |  | 1,224 |  |  |  | 1,297 |
Total stock-based compensation expense |  | $ | 1,828 |  |  | $ | 1,816 |

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