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Stock Incentive Plans
9 Months Ended
Sep. 30, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Incentive Plans

14. STOCK INCENTIVE PLANS

Stock Options and Restricted Stock Units (“RSU”)

The following table summarizes option and unvested RSU activity under the Company’s 2014 Equity Incentive Plan and 2016 Inducement Plan and related information:

 

 

 

Shares

Available

for Grant

 

 

Stock

Options

Outstanding

 

 

Weighted-

Average

Exercise

Price

 

 

Number of

RSU Shares

 

 

Weighted-

Average

Grant Date

Fair Value

 

Balance—December 31, 2017

 

 

156,429

 

 

 

1,941,473

 

 

$

4.21

 

 

 

439,926

 

 

$

4.39

 

Additional options authorized

 

 

1,957,075

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock grants

 

 

(22,809

)

 

 

 

 

 

 

 

 

 

 

 

 

RSUs granted

 

 

(740,334

)

 

 

 

 

 

 

 

 

740,334

 

 

 

11.97

 

RSUs forfeited

 

 

16,150

 

 

 

 

 

 

 

 

 

(16,150

)

 

 

5.15

 

RSUs vested

 

 

 

 

 

 

 

 

 

 

 

(269,806

)

 

 

8.55

 

Repurchases of common stock under employee incentive plans

 

 

67,656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options granted

 

 

(901,533

)

 

 

901,533

 

 

 

12.06

 

 

 

 

 

 

 

Options exercised

 

 

 

 

 

(281,465

)

 

 

2.09

 

 

 

 

 

 

 

Options forfeited

 

 

27,553

 

 

 

(27,553

)

 

 

5.19

 

 

 

 

 

 

 

Options expired

 

 

1,817

 

 

 

(1,817

)

 

 

3.55

 

 

 

 

 

 

 

Balance—September 30, 2018

 

 

562,004

 

 

 

2,532,171

 

 

$

7.23

 

 

 

894,304

 

 

$

9.41

 

 

The total intrinsic value of options exercised was $2.6 million in the nine months ended September 30, 2018.

As of September 30, 2018, the total intrinsic value of outstanding RSUs was approximately $3.0 million and there were $6.6 million of unrecognized compensation costs related to RSUs, which are expected to be recognized over a weighted-average period of 3.19 years.

As of September 30, 2018, the total intrinsic value of outstanding options was approximately $51.1 million and there were $6.4 million of unrecognized compensation costs related to options, which are expected to be recognized over a weighted-average period of 3.20 years.

Options outstanding that have vested and are expected to vest at September 30, 2018 are as follows:

 

 

Number of

Shares Issued

 

 

Weighted Average

Exercise Price

 

 

Weighted Average Remaining Contractual Life (Years)

 

 

Aggregate

Intrinsic Value

(In Thousands)

 

Vested

 

 

1,024,442

 

 

$

4.96

 

 

 

6.59

 

 

$

24,478

 

Expected to vest

 

 

1,329,020

 

 

 

8.85

 

 

 

7.20

 

 

 

26,575

 

Total

 

 

2,353,462

 

 

 

 

 

 

 

 

 

 

$

51,053

 

2014 Employee Stock Purchase Plan

During the offering period in 2017 that ended on December 31, 2017, 34,176 shares were purchased for aggregate proceeds of $0.1 million from the issuance of shares, which occurred on January 4, 2018.  During the offering period in 2018 that ended on June 30, 2018, 42,534 shares were purchased for aggregate proceeds of $0.3 million from the issuance of shares, which occurred on July 2, 2018.

Valuation Assumptions

The estimated fair value of employee stock options and ESPP shares were estimated using the Black Scholes option-pricing model based on the following weighted average assumptions:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Employee stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected term (in years)

 

 

5.8

 

 

 

5.7

 

 

 

6.0

 

 

 

5.9

 

Expected volatility

 

 

66.00

%

 

 

59.33

%

 

 

68.47

%

 

 

56.05

%

Risk-free interest rate

 

 

2.81

%

 

 

1.88

%

 

 

2.72

%

 

 

1.97

%

Expected dividend yield

 

 

%

 

 

%

 

 

%

 

 

%

Employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected term (in years)

 

 

0.5

 

 

 

0.5

 

 

 

0.5

 

 

 

0.5

 

Expected volatility

 

 

59.94

%

 

 

98.58

%

 

 

92.71

%

 

 

77.42

%

Risk-free interest rate

 

 

2.14

%

 

 

1.13

%

 

 

1.76

%

 

 

0.85

%

Expected dividend yield

 

 

%

 

 

%

 

 

%

 

 

%

 

Risk-free Interest Rate: The Company based the risk-free interest rate over the expected term of the award based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of grant.

Volatility: The Company used an average historical stock price volatility of its own stock and those comparable public companies that were deemed to be representative of future stock price trends.

Expected Term: The expected term represents the period for which the Company’s stock-based compensation awards are expected to be outstanding and is based on analyzing the vesting and contractual terms of the awards and the holders’ historical exercise patterns and termination behavior.

Expected Dividends: The Company has not paid and does not anticipate paying any dividends in the near future.

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense relating to employee and nonemployee stock options, RSUs and ESPP shares for the three and nine months ended September 30, 2018 and 2017, included in the statements of operations as follows (in thousands): 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Cost of testing

 

$

123

 

 

$

38

 

 

$

375

 

 

$

157

 

Research and development

 

 

763

 

 

 

104

 

 

 

1,438

 

 

 

279

 

Sales and marketing

 

 

199

 

 

 

32

 

 

 

729

 

 

 

127

 

General and administrative

 

 

775

 

 

 

256

 

 

 

2,536

 

 

 

753

 

Total

 

$

1,860

 

 

$

430

 

 

$

5,078

 

 

$

1,316

 

 

 

No tax benefit was recognized related to share-based compensation expense since the Company has never reported taxable income and has established a full valuation allowance to offset all of the potential tax benefits associated with its deferred tax assets.  In addition, no amounts of stock-based compensation expense were capitalized for the periods presented.