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Stockholders' Equity | 12 Months Ended
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Mar. 31, 2017
Equity [Abstract] |
Stockholders' Equity | 5. Stockholders’ Equity Stock-based compensation expense and valuation information Stock-based compensation expense for all stock awards consists of the following (in thousands):
|  | Year Ended March 31, 2017 |  |  | Year Ended March 31, 2016 (1) |  |  | Year Ended March 31, 2015 |
Research and development |  | $ | 1,646 |  |  | $ | 1,248 |  |  | $ | 1,190 |
General and administrative |  | $ | 5,746 |  |  | $ | 7,308 |  |  | $ | 5,830 |
Total |  | $ | 7,392 |  |  | $ | 8,556 |  |  | $ | 7,020 |
| (1) | Included in total stock option-based compensation for the year ended March 31, 2016 is additional expense resulting from acceleration of the vesting schedule to fully vest options held by a terminated executive as pursuant to the 2012 Equity Incentive Plan. Additionally, as part of the severance agreement, a modification was made to extend the exercise period of the fully vested options, resulting in an incremental expense.
The total unrecognized compensation cost related to unvested stock option grants as of March 31, 2017 was approximately $10,271,000 and the weighted average period over which these grants are expected to vest is 2.20 years. The total unrecognized stock-based compensation expense related to restricted stock units as of March 31, 2017 was approximately $3,557,000, which will be recognized over a weighted average period of 2.86 years. As of March 31, 2017, there was no unrecognized stock-based compensation expense for restricted stock awards. The Company calculates the grant date fair value of all stock-based awards in determining the stock-based compensation expense. Stock-based awards include (i) stock options, (ii) restricted stock awards, (iii) restricted stock units, and (iv) options to purchase stock granted under the 2016 Employee Stock Purchase Plan (“ESPP”). The Company uses the Black-Scholes valuation model to calculate the fair value of stock options. Stock-based compensation expense is recognized over the vesting period using the straight-line method. The fair value of stock options was estimated at the grant date using the following weighted average assumptions:
|  | Year Ended March 31, 2017 |  |  | Year Ended March 31, 2016 |  |  | Year Ended March 31, 2015 |
Dividend yield |  |  | — |  |  |  | — |  |  |  | — |
Volatility |  |  | 72.17 | % |  |  | 73.96 | % |  |  | 76.90 | %
Risk-free interest rate |  |  | 1.16 | % |  |  | 1.57 | % |  |  | 1.60 | %
Expected life of options |  | 6.00 years |  |  | 6.00 years |  |  | 6.00 years |
Weighted average grant date fair value |  | $ | 2.41 |  |  | $ | 2.52 |  |  | $ | 4.14 |
The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. Due to the Company’s limited historical data, the estimated volatility incorporates the historical and implied volatility of comparable companies whose share prices are publicly available. The risk-free interest rate assumption was based on the U.S. Treasury rates. The weighted average expected life of options was estimated using the average of the contractual term and the weighted average vesting term of the options. Certain options granted to consultants are subject to variable accounting treatment and are required to be revalued until vested. The fair value of each restricted stock award is recognized as stock-based compensation expense over the vesting term of the award. The fair value is based on the closing stock price on the date of the grant. The fair value of each restricted stock unit is recognized as stock-based compensation expense over the vesting term of the award. The fair value is based on the closing stock price on the date of the grant. The Company uses the Black-Scholes valuation model to calculate the fair value of shares issued pursuant to the Company’s ESPP. Stock-based compensation expense is recognized over the purchase period using the straight-line method. The fair value of ESPP shares was estimated at the purchase period commencement date using the following weighted average assumptions:
|  | Year Ended March 31, 2017 |
Dividend yield |  |  | — |
Volatility |  | 72.89 % - 74.70 % |
Risk-free interest rate |  | 0.47 % - 0.79 % |
Expected term |  | 6 months |
Grant date fair value |  | $ | 1.04 - 1.22 |
The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. Due to the Company’s limited historical data, the estimated volatility incorporates the historical and implied volatility of comparable companies whose share prices are publicly available. The risk-free interest rate assumption was based on the U.S. Treasury rates. The expected life is the 6-month purchase period. Preferred stock The Company is authorized to issue 25,000,000 shares of preferred stock. There are no shares of preferred stock currently outstanding, and the Company has no present plans to issue shares of preferred stock. Common stock In May of 2008, the Board of Directors of the Company approved the 2008 Equity Incentive Plan (the “2008 Plan”). The 2008 Plan authorized the issuance of up to 1,521,584 common shares for awards of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock award units, and stock appreciation rights. The 2008 Plan terminates on July 1, 2018. No shares have been issued under the 2008 Plan since 2011, and the Company does not intend to issue any additional shares from the 2008 Plan in the future. In January 2012, the Board of Directors of the Company approved the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan authorized the issuance of up to 6,553,986 shares of common stock for awards of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares, and other stock or cash awards. The Board of Directors and stockholders of the Company approved an amendment to the 2012 Plan in August 2013 to increase the number of shares of common stock that may be issued under the 2012 Plan by 5,000,000 shares. In addition, the Board of Directors and stockholders of the Company approved an amendment to the 2012 Plan in August 2015 to further increase the number of shares of common stock that may be issued under the 2012 Plan by 6,000,000 shares, bringing the aggregate shares issuable under the 2012 Plan to 17,553,986. The 2012 Plan as amended and restated became effective on August 20, 2015 and terminates ten years after such date. As of March 31, 2017, 3,617,386 shares remain available for issuance under the 2012 plan. On April 24, 2017 the Company filed a Registration Statement on Form S-8 with the SEC authorizing the issuance of 2,297,034 shares of the Company’s Common Stock, pursuant to the terms of an Inducement Award Stock Option Agreement and an Inducement Award Performance-Based Restricted Stock Unit Agreement (collectively, the “Inducement Award Agreements”). The Company filed a shelf registration statement on Form S-3 (File No. 333-189995), or the 2013 Shelf, with the SEC on July 17, 2013 authorizing the offer and sale in one or more offerings of up to $100,000,000 in aggregate of common stock, preferred stock, debt securities, or warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities. This 2013 Shelf was declared effective by the SEC on July 26, 2013. A shelf registration statement on Form S-3 (File No. 333-202382), or the 2015 shelf, was filed with the SEC on February 27, 2015 authorizing the offer and sale in one or more offerings of up to $190,000,000 in aggregate of common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities. The 2015 shelf was declared effective by the SEC on March 17, 2015. In November 2013, the Company entered into an equity distribution agreement with an investment banking firm. Under the terms of the distribution agreement, the Company may offer and sell up to 4,000,000 shares of its common stock, from time to time, through the investment bank in at-the-market offerings, as defined by the SEC, and pursuant to the 2013 Shelf. During the years ended March 31, 2017, 2016 and 2015, the Company issued 0, 0 and 2,197,768 shares of common stock in at-the-market offerings under the distribution agreement with net proceeds of $0, $0 and $16.1 million, respectively. In December 2014, the Company entered into an equity offering sales agreement with another investment banking firm. Under the terms of the sales agreement, the Company may offer and sell shares of its common stock, from time to time, through the investment bank in at-the-market offerings, as defined by the SEC, and pursuant to the Company’s 2013 Shelf. During the years ended March 31, 2017, 2016, and 2015, the Company issued 997,181, 0, and 1,000,000 shares of common stock in at-the-market offerings under the sales agreement with net proceeds of $4.6 million, $0, and $6.2 million, respectively. As of March 31, 2017, the Company has sold an aggregate of 1,997,181 shares of common stock in at-the-market offerings under the 2014 Sales Agreement, with net proceeds of approximately $10.8 million. On July 20, 2016, the Company filed a prospectus supplement to move the remaining shares of common stock that previously could have been sold pursuant to the 2014 Sales Agreement under the 2013 Shelf to the 2015 Shelf, which does not expire until March 17, 2018. On the same date, the Company filed a post-effective amendment to the 2013 Shelf de-registering all remaining securities that could have been offered by the Company pursuant to the 2013 Shelf. Based on sales through March 31, 2017, the Company can sell an additional $21.9 million of shares pursuant to the 2014 Sales Agreement under the 2015 Shelf. The Company intends to use the net proceeds raised through any at-the-market sales for general corporate purposes, including research and development, the commercialization of the Company’s products, general administrative expenses, and working capital and capital expenditures. On June 18, 2015, the Company entered into an Underwriting Agreement with Jefferies LLC and Piper Jaffray & Co., acting as representatives of the underwriters named in the 2015 Underwriting Agreement and as joint book-running managers, relating to the issuance and sale of 9,425,000 shares of the Company’s common stock, par value $0.001 per share (the “2015 Offering”). The price to the public in the 2015 Offering was $4.25 per share, and the Underwriters have agreed to purchase the shares from the Company pursuant to the 2015 Underwriting Agreement at a price of $3.995 per share. Under the terms of the 2015 Underwriting Agreement, the Company granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 1,413,750 shares. The Company issued 10,838,750 shares of common stock pursuant to the 2015 Underwriting Agreement, including shares issuable upon the exercise of the over-allotment option, with net proceeds of approximately $43.1 million, after deducting underwriting discounts and commissions and expenses payable by the Company. The shares were issued pursuant to the 2015 Shelf. On October 25, 2016, the Company closed the issuance and sale of 10,065,000 shares (the “2016 Offering”) of its common stock. The 2016 Offering was effected pursuant to an Underwriting Agreement (the “2016 Underwriting Agreement”), dated October 20, 2016, with Jefferies LLC (the “Representative”), acting as representative of the underwriters named in the 2016 Underwriting Agreement. The price to the public in the 2016 Offering was $2.75 per share, and the underwriters purchased the shares from the Company pursuant to the 2016 Underwriting Agreement at a price of $2.585 per share. The net proceeds to the Company from the 2016 Offering were approximately $25.7 million after deducting underwriting discounts and commissions and expenses payable by the Company. The 2016 Offering was made pursuant to the Company’s 2015 Shelf. In addition, during the years ended March 31, 2017, 2016, and 2015, the Company issued 700,379, 32,914, and 210,600 shares of common stock upon exercise of 822,903, 43,796, and 211,647 warrants, respectively. During the years ended March 31, 2017, 2016, and 2015, the Company issued 245,271, 116,001, and 205,033 shares of common stock upon exercise of 245,271, 116,001, and 205,684 stock options, respectively. Restricted stock awards On August 6, 2012, the Company issued 200,000 restricted stock awards to a member of senior management, the vesting of which was performance-based with achievement to be measured at December 31, 2014 or earlier if the metric was achieved. As of December 31, 2014, the Company had determined that three of the four target metrics had been achieved with the fourth performance metric criterion not met resulting in 150,000 shares of restricted stock vested and the remaining 50,000 restricted stock awards surrendered back to the Company unvested. The Company recognized the related stock-based compensation expense over the requisite service period ending on March 31, 2015. During the year ended December 31, 2012, the Company issued an aggregate 950,000 of restricted stock awards to certain members of senior management and 130,000 restricted stock awards to non-executive employees. The vesting schedule is 25% on each anniversary of the vesting start date over four years. Additionally, the Company issued 100,000 restricted stock awards to a consultant. The vesting schedule is 100% after six months. During the year ended March 31, 2015, 137,816 restricted stock awards were surrendered related to shares of common stock returned to the Company, at the option of the holder, to cover the tax liability related to the vesting of 255,000 restricted stock awards. Upon the return of the common stock, 137,816 stock option grants with immediate vesting were granted to the individual at the vesting date market value strike price. During the year ended March 31, 2016, 129,900 restricted stock awards were surrendered related to shares of common stock returned to the Company, at the option of the holder, to cover the tax liability related to the vesting of 250,000 restricted stock awards. Upon the return of the common stock, 129,900 stock option grants with immediate vesting were granted to the individual at the vesting date market value strike price. During the year ended March 31, 2016, there were 2,500 restricted stock awards forfeited by one employee upon termination of their employment with the Company. A summary of the Company’s restricted stock award activity for the year ended March 31, 2017 is as follows:
|  | Number of Shares |
Unvested at March 31, 2016 |  |  | 6,250 |
Granted |  |  | — |
Vested |  |  | (6,250 | )
Canceled / forfeited |  |  | — |
Unvested at March 31, 2017 |  |  | — |
Restricted stock units During the year ended March 31, 2017, the Company issued restricted stock units for an aggregate of 1,309,656 shares of common stock to its employees and directors. These shares of common will be issued upon vesting of the restricted stock units. Vesting generally occurs (i) on the one-year anniversary of the grant date, (ii) quarterly over a three-year period, (iii) quarterly over a four-year period, (iv) over a four-year period, with 25% vesting on the one-year anniversary of the vesting commencement date and the remainder vesting ratably on a quarterly basis over the next twelve quarters, or (v) over a three-year period with 50% vesting on the two-year anniversary of the vesting commencement date and 50% vesting on the three-year anniversary of the vesting commencement date. A summary of the Company’s restricted stock unit activity for the year ended March 31, 2017 is as follows:
|  | Number of Shares |  |  | Weighted Average Price |
Unvested at March 31, 2016 |  |  | — |  |  |  | — |
Granted |  |  | 1,309,656 |  |  | $ | 3.59 |
Vested |  |  | (106,650 | ) |  | $ | 3.86 |
Canceled / forfeited |  |  | (24,892 | ) |  | $ | 3.21 |
Unvested at March 31, 2017 |  |  | 1,178,114 |  |  | $ | 3.57 |
Stock options During the years ended March 31, 2017 and 2016, under the 2012 Equity Incentive Plan, 1,955,016 and 2,966,778 incentive stock options were issued, respectively, at various exercise prices. The stock options generally vest on (i) the one year anniversary of the grant date, (ii) quarterly over a three year period, or (iii) over a four-year period with a quarter vesting on either the one year anniversary of employment or the one year anniversary of the vesting commencement date, and the remainder vesting ratably over the remaining 36 month terms. Stock options can also vest immediately at the grant date or vest after one full year. The following table summarizes stock option activity for the year ended March 31, 2017:
|  | Options Outstanding |  |  | Weighted- Average Exercise Price |  |  | Aggregate Intrinsic Value |
Outstanding at March 31, 2016 |  |  | 9,614,627 |  |  | $ | 4.79 |  |  | $ | 1,927,137 |
Options granted |  |  | 1,955,016 |  |  | $ | 3.79 |  |  | $ | — |
Options canceled |  |  | (368,171 | ) |  | $ | 5.64 |  |  | $ | — |
Options exercised |  |  | (245,271 | ) |  | $ | 2.38 |  |  | $ | 356,616 |
Outstanding at March 31, 2017 |  |  | 10,956,201 |  |  | $ | 4.63 |  |  | $ | 4,876,437 |
Vested and Exercisable at March 31, 2017 |  |  | 7,054,815 |  |  | $ | 4.64 |  |  | $ | 4,380,611 |
The weighted-average remaining contractual term of stock options exercisable and outstanding at March 31, 2017 was approximately 5.89 years. Employee Stock Purchase Plan In June 2016, our Board of Directors adopted, and in August 2016 stockholders subsequently approved, the 2016 ESPP, consisting of 1,500,000 shares of common stock. The ESPP permits employees after five months of service to purchase common stock through payroll deductions, limited to 15 percent of each employee’s compensation up to $25,000 or 10,000 shares per employee per year. Shares under the ESPP are purchased at 85 percent of the fair market value at the lower of (i) the closing price on the first trading day of the six-month purchase period or (ii) the closing price on the last trading day of the six-month purchase period. The initial offering period commenced in September 2016. During the year ended March 31, 2017, 52,557 shares were issued under the ESPP. At March 31, 2017, there were 1,447,443 shares remaining available for the purchase under the ESPP. Warrants During the years ended December 31, 2012 and 2011, the Company issued warrants to investors to purchase 21,347,182 and 2,909,750 shares, respectively, of its common stock. During the years ended March 31, 2017, 2016 and 2015, 353,093, 0 and 203,000 of these warrants were exercised for cash proceeds of approximately $336,000, $0 and $445,000, respectively, and 469,000, 43,796 and 8,647 of these warrants were exercised through a cashless exercise for issuance of 347,286, 32,914 and 7,600 shares of common stock, respectively. During the year ended March 31, 2014, the Company entered into amendment agreements for 269,657 warrants to purchase common stock which reduced the exercise price of the warrants from $1.00 to $0.85, which removed the down-round price protection provision of the warrant agreement related to the adjustment of the exercise price upon issuance of additional shares of common stock. As a result of the removal of the down-round price protection provision, the warrants were reclassified from liability to equity instruments at their fair value. The Company determined the incremental expense associated with the modification based on the fair value of the awards prior to and subsequent to the modification. The fair value of the awards subsequent to modification was calculated using the Black-Scholes model. The incremental expense associated with the modification of approximately $12,000 was recognized as interest expense for the year ended March 31, 2014. In 2012, the Company issued a total of 650,000 warrants to purchase common stock, in connection with consulting agreements, at prices ranging from $1.70 to $3.24, with lives ranging from two to five years, to be earned over service periods of up to six months. During the years ended March 31, 2017, 2016, and 2015, 0, 0, and 0 warrants held by consultants were exercised. As of March 31, 2017, 1,370 of these warrants are outstanding. Additionally, during September 2014, the Company issued 50,000 warrants to a consultant in recognition of services previously provided. These warrants were classified as equity instruments because they do not contain any anti-dilution provisions. As of December 31, 2014, the full amount of the warrants related to these services, approximately $237,000 had been recognized. In November 2014, in connection with a consulting agreement, the Company issued 145,000 warrants to purchase common stock, at a price of $6.84, with a life of five years, to be earned over a seventeen month service period ended on March 31, 2016. The final number of vested warrant shares was 95,000, based on management’s judgment of the satisfaction of specific performance metrics. The fair value of the warrants was estimated to be approximately $74,000, which was revalued and amortized over the term of the consulting agreement. These warrants were classified as equity instruments because they do not contain any anti-dilution provisions. The Black-Scholes model, using a volatility rate of 73.4% and a risk-free interest rate factor of 1.21%, was used to determine the value as of March 31, 2016. The Company recognized approximately $6,000 and $31,000 during the years ended March 31, 2016 and 2015, respectively, related to these services. As of March 31, 2016, these warrants were fully expensed. The following table summarizes warrant activity for the years ended March 31, 2017:
|  | Warrants |  |  | Weighted-Average Exercise Price |
Balance at March 31, 2016 |  |  | 1,046,813 |  |  | $ | 2.29 |
Granted |  |  | — |  |  |  | — |
Expired / Canceled |  |  | (3,350 | ) |  | $ | 1.00 |
Exercised |  |  | (822,093 | ) |  | $ | 0.98 |
Balance at March 31, 2017 |  |  | 221,370 |  |  | $ | 7.16 |
The warrants outstanding at March 31, 2017 are immediately exercisable at prices between $2.28 and $7.62 per share, and have a weighted average remaining term of approximately 1.86 years. Common stock reserved for future issuance Common stock reserved for future issuance consisted of the following at March 31, 2017:
Common stock warrants outstanding |  |  | 221,370 |
Common stock options outstanding under the 2008 Plan |  |  | 622,192 |
Common stock options outstanding and reserved under the 2012 Plan |  |  | 13,951,395 |
Restricted stock units outstanding under the 2012 Plan |  |  | 1,178,114 |
Common stock reserved under the 2016 Employee Stock Purchase Plan |  |  | 1,447,443 |
Total |  |  | 17,420,514 |

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References No definition available. + Details
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