9. STOCKHOLDERS’ EQUITY

Stock Option Plan

At December 31, 2015, we have one stock option plan, the Amended and Restated 2001 Stock Option Plan (“2001 Plan”). Under the 2001 Plan, qualified incentive stock options and non-qualified stock options may be granted to purchase up to an aggregate of 2,050,000 shares of the Company's common stock, subject to certain anti-dilution provisions. The exercise price per share of common stock may not be less than 100% (110% for qualified incentive stock options granted to stockholders owning at least 10% of common shares) of the fair market value of the Company's common stock on the date of grant. In general, the options vest and become exercisable in four equal annual installments following the date of grant, although the Company’s Board, at its discretion, may provide for different vesting schedules. The options expire 10 years (five years for qualified incentive stock options granted to stockholders owning at least 10% of common shares) after such date. As of December 31, 2015, options to purchase 562,000 shares of common stock were outstanding under the 2001 Plan, and a total of 209,098 shares remain available for grant under the 2001 Plan.

Stock-Based Compensation

ASC 718 requires that employee stock-based compensation costs to be recognized over the requisite service period, or the vesting period, in a manner similar to all other forms of compensation paid to employees. The allocation of employee stock-based compensation costs to each operating expense line are estimated based on specific employee headcount information at each grant date and estimated stock option forfeiture rates and revised, if necessary, in future periods if actual employee headcount information or forfeitures differ materially from those estimates. As a result, the amount of employee stock-based compensation costs we recognize in each operating expense category in future periods may differ significantly from what we have recorded in the current period.

Stock-based compensation expense recognized under ASC 718 was as follows:

	December 31,
	2015		2014		2013
Research and development	$	-	$	-	$	92,249
General and administrative		105,782		21,416		19,387
Total stock-based compensation expense	$	105,782	$	21,416	$	111,636

The stock-based compensation expense related to employees for the year ended December 31, 2015 was $105,782. In 2014 employee stock compensation of $21,416 was recorded to general administrative expense and in 2013 non-employee stock compensation of $79,049 was recorded to R&D.

Stock Options

30,000 stock options valued at approximately $450,000 were granted to two new members of the Board (Jennifer Chao and Jyrki Mattila, M.D., Ph.D.) during the year ended December 31, 2015. 15,000 stock options valued at approximately $123,000 were granted to a new member of the Board (Max Link, Ph.D.) during the year ended December 31, 2014. At the time of Dr. Link’s sudden death on October 6, 2014, none of these options had vested and, in accordance with the applicable terms, they expired upon his death. For the year ended December 31, 2013, an aggregate 30,000 stock options were granted, valued at approximately $165,000. The following table presents the assumptions used to estimate the fair values of the stock options granted in the periods presented:

	2015			2014			2013
Risk-free interest rate		1.41	%		1.66	%		1.21	%
Expected volatility		39	%		32	%		35	%
Expected life (in years)		6.25			5			5
Dividend yield		-			-			-

The summary of the stock options activity is as follows for year ended:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2014		1,167,000		$	9.03		3.65	$	15,420,965
Grants		15,000			26.48		10.00		-
Exercised		(407,042	)		5.27		-		11,559,689
Forfeitures or expirations		(15,000	)		26.48		-		-
Outstanding at January 1, 2015		759,958			11.04		3.12		23,483,235
Grants		30,000			37.64		10.00		-
Exercised		(227,958	)		12.39		-		9,251,027
Forfeitures or expirations		-			-		-		-
Outstanding at December 31, 2015		562,000			11.91		2.51		17,456,220

Vested and expected to vest at December 31, 2015		562,000			11.91		2.51		17,456,220
Exercisable at December 31, 2015		504,500		$	9.60		1.97	$	16,833,170

The following table summarizes information relating to stock options by exercise price at December 31, 2015:

		Outstanding Shares						Exercisable Shares
Option Exercise Price		Number of Shares		Weighted Average Life (years)		Weighted Average Exercise Price		Number of Shares		Weighted Average Option Price		Weighted Average Life (years)
$	0.83 - 1.00		225,000		0.41	$	0.91		225,000	$	0.91		0.41
	4.00 - 5.50		50,000		1.70		5.22		50,000		5.22		1.70
	13.24 - 15.85		65,000		4.39		14.50		65,000		14.50		4.39
	17.00 - 21.00		145,000		3.38		19.48		137,500		19.57		3.14
	26.43 - 37.64		77,000		5.98		31.95		27,000		27.67		3.79
			562,000		2.51	$	11.91		504,500	$	9.60		1.97

During the years 2015, 2014 and 2013, $2.8 million, $2.1 million and $30,000 proceeds were received from stock options exercised, respectively. Aggregate intrinsic value represents the total pre-tax intrinsic value, based on the closing price of our common stock of $42.97 on December 31, 2015, which would have been received by the option holders had all option holders exercised their options as of that date. Total unrecognized compensation cost related to non-vested stock options outstanding as of December 31, 2015 was approximately $0.4 million which we expect to recognize over a weighted-average period of 3.17 years.