SHARE-BASED COMPENSATION

The amount of share-based compensation expense recognized by the Company by line item on its consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands):



	Three Months ended September 30,					Nine Months ended September 30,
	2019			2018		2019		2018
Research and development	$	(20	)	$	99	$	119	$	387
General and administrative	249			149		$	792	548
	$	229		$	248	$	911	$	935

2014 Stock Incentive Plan

The Company's 2014 Stock Incentive Plan, as amended ("2014 Plan"), was adopted by its Board of Directors in December 2013 and subsequently approved by its stockholders in January 2014. The 2014 Plan became effective immediately prior to the closing of the Company's IPO in February 2014 and provides for the grant of incentive and non-qualified stock options, restricted stock awards and units, stock appreciation rights and other stock-based awards, with amounts and terms of grants determined by the Company's Board of Directors at the time of grant, to the Company's employees, officers, directors, consultants and advisors. Currently there are only stock options outstanding under the 2014 Plan, which generally vest over a four-year period at the rate of 25% of the grant vesting on the first anniversary of the date of grant and 6.25% of the grant vesting at the end of each successive three-month period thereafter. Stock options granted under the 2014 Plan are exercisable for a period of ten years from the date of grant. There were 4.3 million stock options outstanding under the 2014 Plan as of September 30, 2019.

At the Annual Meeting of Stockholders in June 2019, the Company's stockholders approved an amendment to the 2014 Plan that (i) increased by 7.9 million the number of shares of common stock reserved for issuance under the 2014 Plan and (ii) eliminated the “evergreen” or automatic replenishment provision of the 2014 Plan, pursuant to which the number of shares of common stock authorized for issuance under the 2014 Plan was automatically increased on an annual basis. As of September 30, 2019, there were 8.6 million shares of common stock available for issuance under the 2014 Plan.

Out-of-Plan Inducement Grants

From time to time, the Company has granted equity awards to its newly hired executives in accordance with Nasdaq's employment inducement grant exemption (Listing Rule 5635(c)(4)). Such grants are made outside of the 2014 Plan and act as an inducement material to the executive's acceptance of employment with the Company. As of September 30, 2019, there were 2.1 million stock options outstanding which were granted as employment inducement awards outside of the 2014 Plan.

Stock Options

The following table summarizes the Company’s total stock option activity, including awards granted under the 2014 Plan and inducement grants made outside of the 2014 Plan, for the nine months ended September 30, 2019:



	Number of Shares under Option (in thousands)		Weighted-average Exercise Price per Option	Weighted-average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2018	3,942		$2.12	9.1	$	57
Granted	3,986		$1.02
Exercised	(30	)	$1.50
Canceled or forfeited	(1,448	)	$1.76
Outstanding at September 30, 2019	6,450		$1.52	9.1	$	680
Exercisable at September 30, 2019	1,744		$2.42	8.1	$	84

The Company recognized $0.2 million and $0.2 million of share-based compensation expense related to stock options for the three months ended September 30, 2019 and 2018, respectively, and $0.9 million and $0.9 million for the nine months ended September 30, 2019 and 2018, respectively. At September 30, 2019, there was $3.5 million of total unrecognized compensation expense related to unvested stock options for employees and non-employee consultants which the Company expects to recognize over a weighted-average period of 3.1 years. The weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 2019 was estimated at $0.69 per option. The total intrinsic value of stock options exercised during the nine months ended September 30, 2019 was de minimis.

For the nine months ended September 30, 2019, the grant-date fair value of stock options was estimated at the time of grant using the following weighted-average inputs and assumptions in the Black-Scholes option pricing model:



Fair value of common stock	$0.69
Exercise price	$1.02
Expected term (in years)	5.98
Risk-free interest rate	2.1%
Expected volatility	78.1%
Dividend yield	—%

In October 2017, the Company issued stock option awards to certain employees which contained performance vesting conditions. These options vested in installments based on the achievement of certain strategic and clinical milestones. In January 2018, March 2018, June 2018 and July 2019, the Compensation Committee determined that certain performance milestones were met. Share-based compensation expense associated with these performance-based stock options was recognized over the service and performance period for performance conditions considered probable of achievement using management’s best estimate. The Company recognized de minimis expense related to these performance-based awards for the three and nine months ended September 30, 2019. There was no unrecognized compensation expense remaining related to these performance-based awards as of September 30, 2019. The Company recognized $(43,000) and $0.2 million of expense related to these performance-based awards for the three and nine months ended September 30, 2018, respectively. The negative expense was attributable to awards granted to the Company's former President and Chief Executive Officer which were canceled following his separation from the Company.