Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

The Plan - In 2007, the Company adopted the First Amended 2007 Stock Incentive Plan, as amended (the “Plan”). The Plan provides for the grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock Awards, Restricted Stock Unit Awards, Performance Awards and other stock-based awards, or any combination of the foregoing to the Company’s key employees, non-employee directors and consultants. Under the Plan, the exercise price is determined by the Board of Directors or the compensation committee of the Board of Directors, and for options intended to qualify as qualified incentive stock options, may not be less than the fair market value as determined by the closing stock price at the date of the grant. Each option and award shall vest and expire as determined by the Board of Directors or the compensation committee. Options expire no later than ten years from the date of grant. All grants provide for accelerated vesting if there is a change of control, as defined in the Plan.

Stock-based compensation expense was $0.2 million and $0.1 million for the three months ended March 31, 2017 and March 31, 2016, respectively. Of these amounts, stock-based compensation expense for personnel involved in the Company’s general and administrative activities for both the three months ended March 31, 2017 and March 31, 2016 was $0.1 million. Stock-based compensation expense for personnel involved in the Company’s research and development activities for the three months ended March 31, 2017 and March 31, 2016 was $0.1 million and $42,000, respectively.

The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock options granted, with the following weighted-average assumptions for options granted in the three months ended March 31, 2017 and 2016:

	2017			2016
Risk-free interest rate		2.09	%		1.49	%
Expected volatility		100	%		108	%
Expected term in years		6.1			6.1
Dividend yield		-	%		-	%

The following summary represents option activity under the Company’s stock-based compensation plan for the three months ended March 31, 2017:

			Weighted-
			Average
			Exercise
	Options		Price
	(in thousands)
Outstanding at December 31, 2016		7,067	$	1.33
Granted		482		0.80
Outstanding at March 31, 2017		7,549		1.29
Exercisable at March 31, 2017		5,505	$	1.01

As of March 31, 2017, the aggregate intrinsic value of outstanding stock options was $0.9 million. The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the Company’s closing stock price on March 31, 2017 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2017. This amount changes based on the fair market value of the Company’s stock. 

As of March 31, 2017, unamortized stock-based compensation expense for all outstanding options was $2.1 million, which is expected to be recognized over a weighted average vesting period of 2.8 years.