Accounting for Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Employee and Non-Employee Share Based Compensation Expense Allocation

For the three and nine months ended September 30, 2014 and 2013, the Company recorded employee and non-employee stock-based compensation expense to the following line items in its Costs and Expenses section of the Consolidated Statements of Operations:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013
Research and development expenses	$	195,670	$	345,390	$	496,418	$	841,909
General and administrative expenses		622,630		577,164		1,749,147		1,657,182
Total stock-based compensation expense	$	818,300	$	922,554	$	2,245,565	$	2,499,091

Vesting Tied to Service Conditions [Member]

Valuation Assumptions Used to Calculate Fair Value of Employee Options Awarded

As discussed below, for employee stock options with market conditions, the Company uses a Monte Carlo simulation valuation model. The Black-Scholes option pricing model employs the following key assumptions for employee and director options awarded during the nine months ended September 30, 2014 and 2013 based on the assumptions noted in the following table:

	For the nine months ended September 30,
	2014	2013
Expected term (years) - Employees	6	6
Expected term (years) – Officers and Directors	7	7
Risk-free interest rate	1.85-2.2%	1.0-2.1%
Volatility	70-71%	70-72%
Dividends	None	None

Vesting Tied to Market Conditions [Member]

Valuation Assumptions Used to Calculate Fair Value of Employee Options Awarded

Monte Carlo simulation models were used to value stock options to purchase an aggregate of 1,040,000 shares of common stock granted to the Company’s officers during the nine months ended September 30, 2014. Of this amount, options to purchase 640,000 shares of common stock were granted in February 2014 with an exercise price of $3.09 and options to purchase 400,000 shares of common stock were granted in June 2014 with an exercise price of $1.75 per share that contained specific market conditions. The key assumptions used in these Monte Carlo simulation models and resulting valuations are noted in the following table:

	Market Condition Options Granted February 18, 2014			Market Condition Options Granted June 2, 2014
Expected life (years) – officers		6			6
Risk-free interest rate		1.9	%		2.1	%
Volatility		70	%		65	%
Dividends		None			None
Number of options granted		640,000			400,000
Fair value per share	$	1.20		$	0.34