10. Stock-Based Compensation

 

2011 Stock Incentive Plan

 

On April 28, 2011, the board of directors adopted the 2011 Stock Incentive Plan (the “Plan”) reserving and authorizing up to 178,571 shares of common stock for stock‑based compensation awards to attract, retain and reward eligible employees, consultants, and non‑employee directors. The options have a contractual term of ten years. Generally, the options vest annually over three or four years, as determined by the board of directors, upon each option grant, although certain option grants in 2015 and 2014 were fully vested on the grant date. On January 10, 2012 and May 6, 2013, the board of directors and stockholders of the Company approved amendments to the Plan authorizing increases in the number of shares reserved for issuance under the Plan of 107,143 and 418,714, respectively, resulting in an aggregate number of shares reserved for issuance under the Plan of 704,428.

 

2015 Omnibus Plan

 

On June 26, 2015, the board of directors adopted the 2015 Omnibus Plan, which was approved by the Company’s stockholders on August 31, 2015, reserving and authorizing up to 890,815 new shares of common stock for issuance. The 2015 Omnibus Plan became effective upon the business day immediately preceding the date of the Company’s final prospectus, which was dated October 14, 2015.

 

As of the date of the 2015 Omnibus Plan, the 2011 Stock Incentive Plan merged with and into the 2015 Omnibus Plan and no additional grants will be made under the 2011 Stock Incentive Plan. Outstanding grants under the 2011 Stock Incentive Plan will continue in effect according to their terms as in effect before the 2015 Omnibus Plan merger, the shares with respect to outstanding grants under the 2011 Stock Incentive Plan will be issued or transferred under the 2015 Omnibus Plan, and the number of shares of common stock remaining available for issuance under the 2011 Stock Incentive Plan are authorized for issuance under the 2015 Omnibus Plan. As of December 31, 2015, there were 696,736 shares remaining under the Plan available for future issuance. During the term of the 2015 Omnibus Plan, the share reserve automatically increases on the first trading day in January of each calendar year, beginning in 2016, by an amount equal to 3% of the total number of outstanding shares of common stock on the last trading day in December of the prior calendar year.

 

The estimated grant date fair market value of the Company’s stock‑based awards is amortized ratably over the employees’ service periods, which is the period in which the awards vest. Stock‑ based compensation expense recognized for the years ending December 31, 2015 and 2014 was as follows:

 

 

A summary of option activity for the years ended December 31, 2015 and 2014 is as follows:

 

 

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. As of December 31, 2015, the aggregate intrinsic value of options outstanding, vested and expected to vest was $0. The total grant date fair value of shares which vested during the years ended December 31, 2015, 2014 and 2013 was $0.7 million, $1.3 million and $0.6 million, respectively.

 

The per‑share weighted‑average grant date fair value of the options granted during 2015, 2014 and 2013 was estimated at $2.80, $2.24 and $5.60, respectively, on the date of grant using the Black‑Scholes option‑pricing model with the following assumptions:

 

 

The valuation assumptions were determined as follows:

 

 

 

 

 

The Company considered numerous objective and subjective factors in the assessment of fair value of its common stock for grants made prior to the date the Company’s common stock began trading separately on the NASDAQ Capital Market, which was November 13, 2015, and includes all grants made to date. The factors considered include the price for the Company’s convertible preferred stock that was sold to investors and the rights, preferences and privileges of the convertible preferred stock and common stock, the trading price of the Company’s units between the IPO date and November 13, 2015, the Company’s financial condition and results of operations during the relevant periods, including the status of the development of the Company’s product candidates, and the status of strategic initiatives. These estimates involve a significant level of judgment.

 

As of December 31, 2015, there was approximately $900,890 of total unrecognized compensation expense related to unvested options granted under the Plan to be recognized as follows: