Share-Based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Shareholders’ Equity

Share-Based Compensation

Share-Based Compensation Expense

Share-based compensation expense recognized in the condensed consolidated statements of operations for the three and nine months ended September 30, 2016 and 2015 is based on awards ultimately expected to vest.

Total share-based compensation expense related to all share-based awards for the three and nine months ended September 30, 2016 and 2015 was comprised of the following (in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2016		2015		2016		2015
Research and development:
Stock options	$	1,678	$	636	$	4,154	$	1,609
Restricted stock	—		240		30		1,452
Warrants	10		15		25		40
Research and development share-based compensation expense	1,688		891		4,209		3,101
General and administrative:
Stock options	1,666		1,443		4,934		2,950
Restricted stock	516		545		1,645		3,719
Warrants	56		182		183		573
General and administrative share-based compensation expense	2,238		2,170		6,762		7,242
Total share-based compensation expense included in expenses	$	3,926	$	3,061	$	10,971	$	10,343

As of September 30, 2016, $33.2 million of total unrecognized share-based compensation expense related to non-vested stock options remains and is expected to be recognized over a weighted-average period of 3.0 years. As of September 30, 2016, $0.9 million of total unrecognized share-based compensation expense related to non-vested restricted stock awards remains and is expected to be recognized over a weighted-average period of 5 months.

Stock Option Valuation

The fair value of each stock option award is estimated on the grant date using a Black-Scholes option pricing model (Black-Scholes model), which uses the assumptions noted in the following table. Expected volatility is based on historical volatility of the Company’s common stock. Expected life of employee stock options is determined using the “simplified” method. The expected life of non-employee stock options is based on the contractual term of the stock options. Risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the stock options in effect at the time of the grants. Dividend yield is based on the expectation of no future dividend payments by the Company.

The Company estimated the fair value of each stock option grant on the grant date using the Black-Scholes model with the following weighted-average assumptions:

	Nine Months Ended   September 30,
	2016		2015
Expected volatility	141	%	147	%
Expected life (years)	5.74 years		4.91 years
Risk-free interest rate	1.3	%	1.4	%
Dividend yield	—		—

Stock Option Activity

The Company’s 2013 Equity Incentive Plan stock option activity for the nine months ended September 30, 2016 is comprised of the following:

	Outstanding Stock Options
	Shares Underlying Stock Options		Weighted- Average Exercise Price per Share
Outstanding at December 31, 2015	2,318,685		$	22.01
Granted	364,500		$	17.59
Exercised	(10,000	)	$	8.52
Forfeited	(47,700	)	$	25.76
Outstanding at September 30, 2016	2,625,485		$	21.38

As of September 30, 2016, there were 1,969,725 shares available for future grants under the 2013 Equity Incentive Plan.

Restricted Stock Award Activity

The Company’s restricted stock award activity for the nine months ended September 30, 2016 is comprised of the following:

	Number of Shares		Weighted- Average Grant Date Fair Market Value
Unvested at December 31, 2015	1,072,899		$	13.00
Vested	(30,220	)	$	5.53
Unvested at September 30, 2016	1,042,679		$	13.22

Warrants

At September 30, 2016, the Company had 68,000 warrants outstanding. During the nine months ended September 30, 2016, the Company issued a warrant to purchase up to 17,000 shares of the Company’s common stock to an outside third party at a price equal to the fair market value of the Company’s common stock on the grant date.