The Company adopted the Savara Inc. Stock Option Plan (the “2008 Plan”), pursuant to which the Company had reserved shares for issuance to employees, directors, and consultants. The 2008 Plan includes (i) the option grant program providing for both incentive and non-qualified stock options, as defined by the Internal Revenue Code, and (ii) the stock issuance program providing for the issuance of awards that are valued based upon common stock, including restricted stock, dividend equivalents, stock appreciation rights, phantom stock, and performance units. The 2008 Plan also allows eligible persons to purchase shares of common stock at an amount determined by the plan administrator. Upon a participant’s termination, the Company retains the right to repurchase nonvested shares issued in conjunction with the stock issuance program at the fair market value per share as of the date of termination.

The Company had previously issued incentive and non-qualified options and restricted stock to employees and non-employees under the 2008 Plan. The terms of the stock options, including the exercise price per share and vesting provisions, were determined by the board of directors. Stock options were granted at exercise prices not less than the estimated fair market value of the Company’s common stock at the date of grant based upon objective and subjective factors including: third-party valuations, preferred stock transactions with third parties, current operating and financial performance, management estimates and future expectations.

The Company operates the 2015 Omnibus Incentive Plan (the “2015 Plan”), as amended and restated with approval by our stockholders in June 2018 and May 2020. The 2015 Plan provides for the grant of incentive and non-statutory stock options, as well as share appreciation rights, restricted shares, restricted stock units, performance units, shares and other stock-based awards. Share-based awards are subject to terms and conditions established by our board of directors or the compensation committee of our board of directors. As of December 31, 2020, the number of shares of our common stock available for grant under the 2015 Plan was 1,677,046 shares.

Shares of common stock that are subject to awards granted under the 2015 Plan shall be counted against the shares available for issuance under this plan as one share for each share subject to a stock option or stock appreciation right and as 1.34 shares for each share subject to an award other than a stock option or a stock appreciation right such as a restricted stock unit (“RSU”). If any shares of common stock subject to an award granted under any of our stockholder-approved, equity-based incentive plans are forfeited, or an award expires or is settled for cash pursuant to the terms of an award, the shares subject to the award may be used again for awards under the 2015 Plan to the extent of the forfeiture, expiration or cash settlement. The shares of common stock will be added back as one share for every share of common stock if the shares were subject to a stock option or stock appreciation right, and as 1.34 shares for every share of common stock if the shares were subject to an award other than a stock option or stock appreciation right.

Under the 2015 Plan, the purchase price of shares of common stock covered by a stock option cannot be less than 100% of the fair market value of the common stock on the date the stock option is granted. Fair market value of the common stock is generally equal to the closing price for the common stock on the principal securities exchange on which the common stock is traded on the date the stock option is granted (or if there was no closing price on that date, on the last preceding date on which a closing price was reported).

The Company has granted equity awards under inducement grants filed in accordance with Nasdaq Listing Rule 5635(c)(4) exclusively to the Company’s CMO as an inducement for the CMO to enter into employment with the Company.

Under both the 2008 Plan and 2015 Plan, stock option and restricted stock unit grants typically vest quarterly over three to four years and expire ten years from the grant date, and restricted stock grants vest on a quarterly basis over four years and expire ten years from the grant date.

The Company values stock options using the Black-Scholes-Merton option pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility, and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company’s employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. The Company uses the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumes no dividend yield because dividends are not expected to be paid in the future, consistent with the Company’s history of not paying dividends. The valuation of stock options is also impacted by the valuation of common stock. Stock option awards generally have ten-year contractual terms and vest over four years for issuances to employees based on continuous service; however, the 2015 Plan allows for other vesting periods.

Restricted stock units are valued at the closing market price of the Company’s common stock on the date of grant.

The following table summarizes the assumptions used for estimating the fair value of stock options granted to employees for the years ended December 31, 2020 and 2019:

	2020	2019
Risk-free interest rate	.36% - .66%	1.39% - 2.60%
Expected term (years)	6.08 - 6.24	6.19 - 7.05
Expected volatility	78.9% - 96.4%	79.9% - 91.3%
Dividend yield	0%	0%

The following table summarizes the assumptions used for estimating the fair value of stock options granted to non-employees for the years ended December 31, 2020 and 2019:

	2020	2019
Risk-free interest rate	—	1.62% - 1.92%
Expected term (years)	—	6.16 - 9.96
Expected volatility	—	83.9% - 91.3%
Dividend yield	—	0%

The following tables provide a summary for the 2008 Plan and 2015 Plan of stock option activity for employees and non-employees, and RSU activity for the year ended December 31, 2020:

	Shares Underlying Option Awards			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life		Aggregate Intrinsic Value (in 000's)
Outstanding at December 31, 2019		4,541,432		$	5.29		8.25	$	461
Granted		2,938,639			1.28		6.19
Exercised		(67,477	)		1.30				66
Expired/cancelled/forfeited		(1,172,252	)		9.46
Outstanding at December 31, 2020		6,240,342			2.66		7.52		190
Options exercisable at December 31, 2020		2,367,880			3.58		4.21		133
Vested and expected to vest at December 31, 2020		6,240,342			2.66		7.52		190

	Shares Underlying Option Awards			Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2019		315,625		$	3.45
Granted		252,272			1.30
Vested		(49,125	)		8.21
Expired/cancelled/forfeited		(9,375	)		11.33
Outstanding at December 31, 2020		509,397		$	1.78

The weighted-average grant date fair values for the Company’s stock options granted during the years ended December 31, 2020 and 2019 were $0.95 per share and $2.30 per share, respectively. The total compensation cost related to nonvested stock options not yet recognized as of December 31, 2020 was $6.5 million, which will be recognized over a weighted-average period of approximately 2.3 years.

The total compensation cost related to unvested RSUs not yet recognized as of December 31, 2020 was $0.7 million, which will be recognized over a weighted-average period of 1.2 years.

During the years ended December 31, 2020 and 2019, the Company granted options to purchase a total of 0 and 60,000 shares of common stock to non-employees, respectively, under the 2015 Plan.

The Company recorded a minimal amount of stock-based compensation expense for options issued to non-employees for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, options to purchase 39,376 shares were held by non-employees and were vested and outstanding.

Effective September 11, 2020, the Company’s Chief Executive Officer (“CEO”) who also served as Chairman of the Board of Directors (“Chairman”) as well as the Chief Business Officer (together, the “Former Executives”) resigned, and Matthew Pauls was appointed as the Company’s Interim Chief Executive Officer (“Interim CEO”) and Chairman and subsequently confirmed as CEO. As part of the termination of employment of the Former Executives, certain supplementary modifications to the Former Executives’ vested and nonvested stock option awards including additional acceleration of nonvested shares, voluntary forfeiture of certain stock option awards, and the extension of the post-termination exercise period of certain stock option awards. During the year ended December 31, 2020, the Company recorded a one-time, noncash incremental compensation expense net of the required reversal of previously recognized compensation attributed to nonvested shares in the amount of $0.8 million which is included in “General and administrative expenses” related to these stock option award modifications. The Company accounted for the resulting net incremental stock option award modification compensation under ASC Topic 718, Compensation – “Stock Compensation.”

Stock-based compensation expense is included in the following line items in the accompanying statements of operations and comprehensive loss for the years ended December 31, 2020 and 2019 (in thousands):

	Year ended December 31,
	2020		2019
Research and development	$	1,626	$	2,123
General and administrative		3,481		2,318
Total stock-based compensation	$	5,107	$	4,441