Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Common Stock

During the three months ended March 31, 2014, the Company issued a total of 2,852,626 shares of common stock of which: (i) 2,797,029 shares were issued upon the conversion of Series C-1² preferred stock; (ii)  52,621 shares were issued upon the conversion of  Series F preferred stock and (iii) 2,976 shares were granted to a consultant.

Preferred Stock

As of March 31, 2014, the Company’s Board of Directors is authorized to issue 8,000,000 shares of preferred stock, with a par value of $0.0001 per share, in one or more series, of which 11,000 are designated Series C-1² preferred stock and 10,000 are designated Series F preferred stock. As of March 31, 2014, 5,393 shares of Series C-1² preferred stock and 3,066 shares of Series F preferred stock were issued and outstanding.

Share-Based Compensation

Share-Based Compensation Plan

In September of 2013, a majority of the shareholders of the Company signed a written consent in lieu of a meeting (the "Written Consent"). The Written Consent approved and adopted an equity compensation plan entitled the 2013 Equity Incentive Plan (the “2013 Equity Plan”). The 2013 Equity Plan is an omnibus equity compensation plan that permits the issuance of various types of equity-based compensation, including options, stock awards, stock appreciation rights and restricted stock units, as well as cash awards, to employees, directors and eligible consultants of the Company. The 2013 Equity Plan has a ten-year term and, subject to shareholder approval as provided under Section 422 of the Internal Revenue Code of 1986, as amended, will permit the issuance of incentive stock options. The administrator under the plan has broad discretion to establish the terms of awards, including the size, term, exercise price (if applicable) and applicable vesting conditions.

The 2013 Equity Plan allows for automatic annual increases on the first day of each year based on 10% of the outstanding shares of Common Stock as of the last day of the previous year end. On January 1, 2014 the total shares available for grant in the 2013 Equity Plan increased to 422,441. At March 31, 2014 there were 367,441 shares available for future grants under the 2013 Equity Plan.

The following table summarizes all share-based compensation expense related to stock options, restricted stock and restricted stock units by expense category (in thousands):

	Three Months Ended March 31,
	2014		2013
Research and development
Stock options	$	8	$	396
Restricted stock	359		3
Research and development share-based compensation expense	367		399
General and administrative
Stock options	23		3,070
Restricted stock	2,308		9
Restricted stock units	—		52
General and administrative share-based compensation expense	2,331		3,131
Total share-based compensation expense included in expenses	$	2,698	$	3,530

Stock Options

During the three months ended March 31, 2014, stock options were granted to 5 employees representing the right to acquire a total of up to 55,000 shares of common stock. All options vest with respect to one quarter of the underlying shares on the first anniversary of the grant and then with respect to the remaining three quarters of the underlying shares on a quarterly basis over the following three years. The Company uses the Black-Scholes valuation model to calculate the fair value of stock options. Stock based compensation expense is recognized over the vesting period using the straight-line method. The fair value of employee stock options was estimated at the grant date using the following assumptions:

	Three Months Ended  March 31, 2014
Dividend yield	—
Volatility	132.0	%
Risk-free interest rate	1.85	%
Expected life of options (years)	6.11

The weighted average grant date fair value per share of employee stock options granted during the three months ended March 31, 2014 was $7.51.

As of March 31, 2014 there was $0.6 million in unrecognized stock option share-based compensation expense to be recognized over the next 44 months. If there are any modifications or cancellations of underlying unvested share-based awards, we may be required to accelerate, increase or cancel remaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation will increase to the extent that we grant additional share-based awards.

A summary of the Company’s stock option activity and related data for the three months ended March 31, 2014 is as follows:

	Outstanding Options
	Number of Shares	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Balance at December 31, 2013	54,000	$	6.00	9.63
Granted	55,000	7.51		9.90
Balance at March 31, 2014	109,000	$	6.76	9.76

Restricted Stock

On January 25, 2014, the Company granted 2,976 shares of restricted stock to a consultant. The restricted stock vested immediately and was issued under the 2013 Equity Plan.

During the three months ended March 31, 2014 there were 39,811 RSA's canceled due to the termination of an employee, the remaining unamortized share-based compensation expense for the canceled RSA's was expensed at March 31, 2014. The remaining unamortized share-based compensation expense for research and development to be recognized over the next 22 months is $2,189,000. The remaining unamortized share-based compensation expense for general and administrative to be recognized over the next 32 months is $11,384,000.