STOCK-BASED COMPENSATION AND STOCK PLANS

6 Months Ended

Jun. 30, 2017

Compensation and Retirement Disclosure [Abstract]

STOCK-BASED COMPENSATION AND STOCK PLANS

6. STOCK-BASED COMPENSATION AND STOCK PLANS

Our stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant). We estimate the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, expected option term, expected volatility of our stock over the option’s expected term, risk-free interest rate over the option’s expected term, and the expected annual dividend yield. We believe that the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of our stock options granted in the three months ended June 30, 2017 and 2016.

The following table presents stock-based compensation expense included in our Condensed Statements of Operations and Comprehensive Loss:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Research and development	$	74	$	109	$	204	$	299
General and administrative		212		312		625		716
Total stock-based compensation expense	$	286	$	421	$	829	$	1,015

In the three and six months ended June 30, 2017 and 2016, no stock-based compensation expense was capitalized and there were no recognized tax benefits associated with the stock-based compensation expense.

Option activity under our stock plans for the six months ended June 30, 2017 was as follows:

Stock Options	Number of Shares			Weighted Average Exercise Price
Outstanding as of December 31, 2016		8,715,048		$	3.71
Granted		2,537,500			1.19
Exercised		—			—
Cancelled		(479,105	)		4.96
Outstanding as of June 30, 2017		10,773,443		$	3.06
Exercisable as of June 30, 2017		6,484,316		$	4.16

In April 2017, the Company amended its chief executive officer’s (the “CEO’s”) employment agreement to grant the CEO a maximum of 600,000 performance-based stock options that vest upon the achievement of certain performance and market based targets. In April 2017, the Company amended its chief operating officer’s (the “COO’s”) employment agreement to grant the COO 300,000 performance-based stock units that vest upon the achievement of certain performance and market based targets. In April 2017, the Company amended its chief medical officer’s (the “CMO’s”) employment agreement to grant the CMO 260,000 performance-based stock options that vest upon the achievement of certain performance based targets. In April 2017, certain other employees were granted a total of 270,000 performance-based stock options that vest upon the achievement of certain performance based targets. Through June 30, 2017 no expense has been recorded for any performance-based stock options granted to the CEO, COO, CMO, or to any other employees.

The aggregate intrinsic value of options outstanding at June 30, 2017 was $496 and $37 related to exercisable options. The weighted average fair value of options granted in the six months ended June 30, 2017 and 2016 was $0.72 and $1.10 per share, respectively. No options were exercised in the six months ended June 30, 2017.

Shares vested, expected to vest and exercisable at June 30, 2017 are as follows:

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Vested and unvested expected to vest at June 30, 2017		10,566,460	$	3.06		6.2	$	479
Exercisable at June 30, 2017		6,484,316	$	4.16		4.3	$	37

The total compensation cost not yet recognized as of June 30, 2017 related to non-vested option awards was $2.7 million, which will be recognized over a weighted-average period of 3.3 years. During the three months ended June 30, 2017, 325,149 shares expired and 153,956 shares were forfeited. The weighted average remaining contractual life for options exercisable at June 30, 2017 was 4.3 years.