Note

— Stock-Based Compensation

As of

September

30,

2017,

the Company had

two

stock-based employee compensation plans, the Stock Incentive Plan (“Incentive Plan”) and the Employee Stock Purchase Plan (“ESPP”). The Incentive Plan was amended and restated in

April 2017

and approved by the Company’s stockholders in

May 2017.

The ESPP was amended and restated in

March 2014

and approved by the Company’s stockholders in

May 2014.

Stock-based compensation expense of

$10,307

(

$10,107

of expense related to the Incentive Plan and

$200

of expense related to the ESPP) was recognized during the

first

nine

months of

2017,

while

$6,478

(

$6,331

of expense related to the Incentive Plan and

$147

of expense related to the ESPP) was recognized during the

first

nine

months of

2016.

There was approximately

$16,282

of total unrecognized compensation cost related to non-vested stock option awards and restricted stock unit awards granted by the Company as of

September

30,

2017.

That cost is expected to be recognized as follows:

$2,264

during the remainder of

2017,

$6,745

2018,

$4,527

2019,

$2,395

2020

and

$351

2021.

In addition, the Company has outstanding performance-based stock options for which

compensation expense is recognized until “performance” has occurred and the award vests. At the time of vesting, compensation expense will be recognized. During the

third

quarter of

2017,

the Company achieved a performance metric under a performance-based option award resulting in

404

options vesting and

$3,193

compensation expense recorded as a result of this achievement.

Stock Incentive Plan

The Company grants stock option awards and restricted stock unit awards to its employees, directors, and consultants under the Incentive Plan. Under the Incentive Plan, stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Stock option awards granted to employees generally vest

25%

each year until fully vested after

four

years. In

August 2013

and

December 2014,

the Company issued

1,032

and

1,250

performance-based stock options, respectively. These awards vest upon successful completion of specific development milestones. As of

September 30, 2017,

75%

of the

August 2013

grants have vested based upon achievement of

three

milestones: (

) successful completion of the OPuS-

clinical trial, for which vesting occurred in the

second

quarter of

2014,

(

) FDA approval of RAPIVAB, for which vesting occurred in the

fourth

quarter of

2014,

and (

) initiation of a Phase

clinical trial to evaluate the safety, pharmacokinetics and pharmacodynamics of orally-administered

BCX7353

in healthy volunteers, for which vesting occurred in the

second

quarter of

2015.

As of

September 30, 2017,

30%

of the

December 2014

grants have vested based upon achievement of successful completion of an HAE patient trial with a

generation compound, for which vesting occurred in

August 2017.

Thus, as of

September 30, 2017,

25%

of the

August 2013

performance-based grants and

70%

of the

December 2014

performance-based grants remain unvested and

compensation expense has been recognized for these portions of the previously issued performance-based grants. Stock option awards granted to non-employee directors of the Company generally vest monthly over

one

year. All stock option awards have contractual terms of

years. The vesting exercise provisions of all awards granted under the Incentive Plan are subject to acceleration in the event of certain stockholder-approved transactions, or upon the occurrence of a change in control as defined in the Incentive Plan.

Related activity under the Incentive Plan is as follows:

	Awards Available			Options Outstanding			Weighted Average Exercise Price
Balance December 31, 2016		2,273			12,095		$	6.55
Plan amendment		1,000			—			—
Restricted stock unit awards granted		(16	)		—			—
Restricted stock unit awards cancelled		3			—			—
Stock option awards granted		(2,591	)		2,591			5.49
Stock option awards exercised		—			(422	)		3.49
Stock option awards cancelled		912			(912	)		10.22

Balance September 30, 2017		1,581			13,352		$	6.19

For stock option awards granted under the Incentive Plan during the

first

nine

months of

2017

and

2016,

the fair value was estimated on the date of grant using a Black-Scholes option pricing model and the assumptions noted in the table below. The weighted average grant date fair value per share of the awards granted during the

first

nine

months of

2017

and

2016

was

$3.74

and

$2.17,

respectively. The fair value of the stock option awards is amortized to expense over the vesting periods using a straight-line expense attribution method. The following table summarizes the key assumptions used by the Company to value the stock option awards granted during the

first

nine

months of

2017

and

2016.

The expected life is based on the average of the assumption that all outstanding stock option awards will be exercised at full vesting and the assumption that all outstanding stock option awards will be exercised at the midpoint of the current date (if already vested) or at full vesting (if

not

yet vested) and the full contractual term. The expected volatility represents the historical volatility on the Company’s publicly traded common stock. The Company has assumed

expected dividend yield, as dividends have never been paid to stock or option holders and will

not

be paid for the foreseeable future. The weighted average risk-free interest rate is the implied yield currently available on

zero

-coupon government issues with a remaining term equal to the expected term.

Weighted Average Assumptions for Stock Option Awards Granted to

Employees and Directors under the Incentive Plan

	2017			2016
Expected Life in Years		5.5			5.5
Expected Volatility		82.0	%		82.0	%
Expected Dividend Yield		0.0	%		0.0	%
Risk-Free Interest Rate		1.9	%		1.4	%

Employee Stock Purchase Plan (“ESPP”)

The Company has reserved a total of

1,475

shares of common stock to be purchased under the ESPP, of which

330

shares remain available for purchase at

September

30,

2017.

Eligible employees

may

authorize up to

15%

of their salary to purchase common stock at the lower of

85%

of the beginning or

85%

of the ending price during

six

-month purchase intervals.

more than

may

be purchased by any

one

employee at the

six

-month purchase dates and

employee

may

purchase stock having a fair market value at the commencement date of

$25

or more in any

one

calendar year. The Company issued

shares during the

first

nine

months of

2017

under the ESPP. Compensation expense for shares purchased under the ESPP related to the purchase discount and the “look-back” option were determined using a Black-Scholes option pricing model.