In November 2017, the Company filed a shelf registration with the SEC on Form S-3. The shelf registration statement includes a prospectus for the at-the-market offering to sell up to an aggregate of $16.0 million of shares of the Company’s common stock through B. Riley FBR, Inc. (“FBR”) as a sales agent (the “FBR Sales Agreement”). During the nine months ended September 30, 2019, the Company sold 6,804,381 shares of common stock at a weighted-average price per share of $0.87 pursuant to the FBR Sales Agreement and received proceeds of approximately $5.8 million, net of commissions and fees. During the nine months ended September 30, 2020, the Company sold 1,395,855 shares of common stock at a weighted-average price per share of $2.42 pursuant to the FBR Sales Agreement and received proceeds of approximately $3.3 million, net of commissions and fees.

Future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of the Company’s common stock and the Company’s capital needs. There can be no assurance that FBR will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that the Company deems appropriate.

In addition, the Company will not be able to make future sales of common stock pursuant to the FBR Sales Agreement unless certain conditions are met, which include the accuracy of representations and warranties made to FBR under the FBR Sales Agreement. Furthermore, FBR is permitted to terminate the FBR Sales Agreement in its sole discretion upon ten days’ notice, or at any time in certain circumstances, including the occurrence of an event that would be reasonably likely to have a material adverse effect on the Company’s assets, business, operations, earnings, properties, condition (financial or otherwise), prospects, stockholders’ equity or results of operations. The Company has no obligation to sell the remaining shares available for sale pursuant to the FBR Sales Agreement.

During the nine months ended September 30, 2020, certain holders of warrants exercised their warrants to purchase 871,682 shares of the Company’s common stock by a “cashless” exercise and received 381,625 shares of the Company’s common stock. The warrants had exercise prices ranging from $2.41 to $3.12 per share. The shares were issued, and the warrants were originally sold, in reliance upon the registration exemption set forth in Section 4(a)(2) of the Securities Act of 1933.

During the nine months ended September 30, 2020, certain holders of stock options exercised their stock options to purchase 4,237 shares of the Company’s common stock. The stock options had exercise prices of $0.62 per share.

Stock-based compensation expense includes charges related to employee stock purchases under the ESPP and stock option grants. The Company measures stock-based compensation expense based on the grant date fair value of any awards granted to its employees. Such expense is recognized over the period of time that employees provide service and earn rights to the awards.

During the nine months ended September 30, 2020, the Company granted stock options to purchase 1,172,000 shares of the Company’s common stock. Of such options, 437,500 did not begin vesting until the date that FDA approved the Gimoti NDA. The estimated fair value of each stock option award granted was determined on the date of grant using the Black Scholes option-pricing valuation model with the following weighted-average assumptions for option grants during the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
	2020	2019
Common Stock Options
Risk free interest rate	0.39% - 0.96%	1.80% - 2.55%
Expected option term	5.5 - 6.0 years	4.27 - 6.0 years
Expected volatility of common stock	99.73% - 103.99%	90.34% - 112.58%
Expected dividend yield	0.0%	0.0%

The estimated fair value of the shares to be acquired under the ESPP was determined on the initiation date of each six-month purchase period using the Black-Scholes option-pricing valuation model with the following weighted-average assumptions for ESPP shares to be purchased during the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Employee Stock Purchase Plan
Risk free interest rate	0.13%	1.89%	0.13% - 1.11%	1.89% - 2.52%
Expected term	0.5 years	0.5 years	0.5 years	0.5 years
Expected volatility of common stock	111.98%	170.68%	69.72% - 111.98%	130.36% - 170.68%
Expected dividend yield	0.0%	0.0%	0.0%	0.0%

The Company recognized non-cash stock-based compensation expense to employees and directors in its research and development and its general and administrative functions during the three and nine months ended September 30, 2020 and 2019 as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	31,186	$	179,227	$	286,148	$	533,518
General and administrative		447,388		152,076		865,543		521,585
Total stock-based compensation expense	$	478,574	$	331,303	$	1,151,691	$	1,055,103

As of September 30, 2020, there was approximately $2.5 million of unrecognized compensation costs related to outstanding employee and board of director options, which are expected to be recognized over a weighted-average period of 1.13 years.