Note 13 – Stock-Based Compensation

Stock Options

The 2015 Stock Incentive Plan, as amended (“2015 Plan”), was approved at the Company’s annual meeting of stockholders in June 2015. Under the 2015 Plan, equity awards may be granted to officers, directors, employees and consultants of and advisors to the Company and any present or future subsidiary.

The 2015 Plan authorizes the issuance of up to 3,800,000 shares of common stock under equity awards granted under the 2015 Plan, which includes an increase of 1,000,000 shares approved for issuance under the 2015 Plan at the Company’s 2019 annual meeting of stockholders. All such shares authorized for issuance under the 2015 Plan have been reserved. The 2015 Plan will expire on March 4, 2025.

The Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”) expired in February 2015 and no new awards may be made under such plan, although awards will continue to be outstanding in accordance with their terms.

The 2015 Plan permits and the 2005 Plan permitted the grant of stock options (including incentive stock options), restricted stock, stock appreciation rights and restricted stock units. In addition, under the 2015 Plan, unrestricted stock, stock units and performance awards may be granted. Stock options and stock appreciation rights generally have a maximum term of 10 years and may be or were granted with an exercise price that is no less than 100% of the fair market value of the Company’s common stock at the time of grant. Grants of stock options are generally subject to vesting over periods ranging from one to four years.

Stock Options and Stock Appreciation Rights

The following is a summary of stock options and stock appreciation rights activity under the 2015 Plan and the 2005 Plan for the year ended December 31, 2019:


	2015 Plan			2005 Plan
		Weighted-			Weighted-
		Average			Average
	Stock	Exercise		Stock	Exercise
	Options	Price		Options	Price
Outstanding at January 1, 2019	2,392,567	$	62.41	582,616	$	65.72
Granted	1,620,721	$	5.98	—	$	—
Exercised	(1,514)	$	27.42	(1,500)	$	11.20
Canceled	(623,073)	$	61.29	(79,336)	$	76.42
Outstanding at December 31, 2019	3,388,701	$	35.64	501,780	$	64.19
Shares exercisable at December 31, 2019	1,017,774	$	80.55	501,780	$	64.19
Shares available for grant at December 31, 2019	228,335

In the third quarter of 2019, the Company granted 192,400 stock appreciation rights with a weighted-average exercise price of $5.95 under the 2015 Plan. In addition, due to the limitations on the equity awards currently available under the 2015 Plan, the Company granted 1,014,200 stock options to certain employees with a weighted-average exercise price of $5.95 under the 2015 Plan that are subject to approval at the Company’s annual meeting of stockholders in June 2020. As these stock options have not yet been approved by the Company’s stockholders, the Company will not record any stock-based compensation expense for these awards until such time these awards are approved by the stockholders and a measurement date occurs.

The fair value of stock options and stock appreciation rights (not including awards that are subject to approval at the Company's annual meeting of stockholders in June 2020) granted under the 2015 Plan was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	2019		2018		2017
Weighted average Black-Scholes fair value of stock options and SARs granted		$4.98		$34.80		$21.20
Risk-free interest rate		1.5%-2.6%		2.3%-3.1%		1.6%-2.3%
Dividend yield		0%		0%		0%
Volatility		105.4%-134.1%		93.3%-115.6%		88.9%-114.1%
Expected term (in years)		3.9-7.5		4.1-7.5		4.1-7.5
Expected forfeiture rate		N/A		N/A		N/A

The Company used the Monte Carlo simulation model to determine the fair value of its 0.1 million stock options containing a market condition that were granted in 2016 (the “Performance Options”). The fair value of the Performance Options was estimated with the following assumptions: 99.11% volatility, a 1.74% risk-free interest rate, 5.62% forfeiture rate and 0% dividend yield, which resulted in fair values of $14.80 to $18.40 per share, and expected terms of 1.35 years to 3.50 years.

The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights outstanding under the 2015 Plan and 2005 Plan as of December 31, 2019 was $0 million and 7.9 years, respectively. The total aggregate intrinsic value and weighted-average remaining contractual term of stock options and stock appreciation rights exercisable under the 2015 Plan and 2005 Plan as of December 31, 2019 was $0 million and 5.6 years, respectively. The aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money stock options and stock appreciation rights) that would have been received by the holders had all stock option and stock appreciation rights holders exercised their stock options and stock appreciation rights on December 31, 2019. This amount is subject to change based on changes to the closing price of the Company’s common stock. The aggregate intrinsic value of stock options exercised and vesting of restricted stock awards for 2019, 2018 and 2017 was $0.5 million, $0.4 million and $0.1 million, respectively.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan, as amended (the "ESPP”), was approved at the Company’s annual meeting of stockholders in June 2013. The amount of shares authorized for issuance under the ESPP was increased by 200,000 shares at the Company's 2019 annual meeting of stockholders. The ESPP currently authorizes an aggregate of 597,500 shares of common stock to be purchased, and the aggregate amount of shares will continue to increase 5% on each anniversary of its adoption up to a maximum of 600,000 shares. The ESPP allows employees to purchase shares of common stock of the Company at each purchase date through payroll deductions of up to a maximum of 15% of their compensation, at 85% of the lesser of the market price of the shares at the time of purchase or the market price on the beginning date of an option period (or, if later, the date during the option period when the employee was first eligible to participate). At December 31, 2019, there were 291,719 shares available for issuance under the ESPP.

The ESPP is considered compensatory for financial reporting purposes. As such, the fair value of ESPP shares was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	2019		2018		2017
Range of Black-Scholes fair values of ESPP shares granted		$2.57-$35.00		$7.20-$70.64		$9.00-$109.40
Risk-free interest rate		1.2%-2.6%		0.7%-2.2%		0.4%-1.1%
Dividend yield		0%		0%		0%
Volatility		52.2%-171.6%		52.2%-203.8%		46.0%-267.8%
Expected term (in years)		0.5-2.0		0.5-2.0		0.5-2.0
Expected forfeiture rate		N/A		N/A		N/A

Restricted Stock Units

The following is a summary of restricted stock units activity for the year ended December 31, 2019:


		Per Share
		Weighted-
	Number of	Average
	Shares	Fair Value
Outstanding and Unvested at January 1, 2019	―	$	―
Restricted stock units granted	1,251,609	$	6.43
Restricted stock units vested	(72,637)	$	10.40
Restricted stock units forfeited	(76,661)	$	9.61
Outstanding and Unvested at December 31, 2019	1,102,311	$	5.95

The Company recorded stock-based compensation expense for awards issued under the above mentioned plans in the consolidated statements of operations as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
Research and development	$	8,436	$	10,575	$	11,750
General and administrative		8,612		7,739		8,059
Total stock-based compensation expense	$	17,048	$	18,314	$	19,809

As of December 31, 2019, there was approximately $26 million of total unrecognized compensation expense related to unvested stock options, stock appreciation rights, restricted stock units and the ESPP. This unrecognized non-cash compensation expense is expected to be recognized over a weighted-average period of 1.6 years, and will be allocated between research and development and general and administrative expenses accordingly. This estimate does not include the impact of other possible stock-based awards that may be made during future periods and awards that require approval by the stockholders.