Stock Option Plan | Stock Option Plan Equity Incentive Plans On January 23, 2014, the stockholders' approved the adoption of the 2014 Equity Incentive Plan, or 2014 EIP. Initially, the aggregate number of shares of common stock that may be issued pursuant to stock awards under the 2014 EIP will not exceed 1,000,000 shares. The number of shares of common stock reserved for issuance under the Company’s 2014 EIP will automatically increase on January 1 of each year, beginning on January 1, 2015, and continuing through and including January 1, 2024, by 4% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by the Company’s Board of Directors. The maximum number of shares that may be issued upon the exercise of ISOs under the Company’s 2014 EIP is 2,000,000 shares. The 2014 EIP provides for the grant of incentive stock options, or ISOs, nonstatutory stock options, or NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation, all of which may be granted to employees, including officers, non-employee directors and consultants of the Company and its affiliates. Additionally, the 2014 EIP provides for the grant of performance cash awards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants. Under the 2014 EIP, options may be granted with different vesting terms from time to time, but not to exceed 10 years from the date of grant. Upon the effectiveness of the 2014 Plan, the Company ceased granting any equity awards under the 2012 Equity Incentive Plan and any cancelled or forfeited shares under the 2012 and 2002 Equity Incentive Plans will be retired. On January 1, 2015, the number of shares of common stock reserved for issuance under the Company’s 2014 Equity Incentive Plan, or 2014 EIP, automatically increased by 4% of the total number of shares of the Company’s common stock outstanding on December 31, 2014, or 950,978 shares. During the year ended December 31, 2015 , the Company granted stock options for 747,338 shares of common stock and 169,336 restricted stock awards under the 2014 EIP, including a stock option grants for 90,000 shares to non-employee directors. As of December 31, 2015 , there were 273,948 shares available for issuance under the 2014 EIP. 2014 Inducement Plan On August 26, 2014, the Company’s Board of Directors authorized the adoption of the 2014 Inducement Plan, or 2014 IN, which became effective immediately. Stockholder approval of the 2014 IN was not required pursuant to Rule 5635 (c)(4) of the NASDAQ Listing Rules. The 2014 IN reserves 325,000 shares of common stock and provides for the grant of NSOs that will be used exclusively for grants to individuals that were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company. On December 14, 2015, the Company’s Board of Directors authorized an additional 500,000 shares of common stock to be reserved for issuance under the 2014 IN. Under the 2014 IN, options may be granted with different vesting terms from time to time, but not to exceed 10 years from the date of grant. During the year ended December 31, 2015 , the Company granted stock options for 206,250 shares of common stock and 34,375 restricted stock awards under the 2014 IN. As of December 31, 2015 , there were 449,889 shares available for issuance under the 2014 IN. Under the 2014 EIP and the 2014 IN plan, restricted stock awards typically vest annually over 1 , 3 , or 4 years , while options typically vest over four years , either with 25% of the total grant vesting on the first anniversary of the option grant date and 1/36th of the remaining grant vesting each month thereafter or 1/48th vesting monthly. The following summary of stock option and restricted stock award activity, excluding 2014 IN, for the periods presented is as follows: Number of Shares Available for Grant Number of Shares Underlying Outstanding Options Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value (In thousands) Balance as of December 31, 2012 32,985 306,317 $ 3.45 — $ — Additional shares reserved 1,080,661 — — Options granted (992,213 ) 992,213 8.80 Options exercised — (4,340 ) 2.55 Options cancelled/forfeited 81,125 (81,125 ) 6.42 Balance as of December 31, 2013 202,558 1,213,065 7.65 Additional shares reserved 1,000,000 — — Options granted (728,349 ) 728,349 30.21 Awards granted (212,450 ) 212,450 — Options exercised — (238,999 ) 5.96 Options cancelled/forfeited 14,600 (14,600 ) 26.89 Awards forfeited 4,500 (4,500 ) — Shares cancelled/retired under 2002/2012 plans (189,225 ) (9,617 ) — Balance as of December 31, 2014 91,634 1,886,148 17.90 Additional shares reserved 950,978 — — Options granted (747,338 ) 747,338 18.94 Awards granted (169,336 ) 169,336 — Options exercised — (205,735 ) 11.84 Options cancelled/forfeited 116,540 (116,540 ) 21.33 Awards forfeited 24,306 (24,306 ) — Awards released — (74,755 ) — Shares cancelled/retired under 2002/2012 plans (19,276 ) — — Shares traded for taxes 26,440 — — Balance as of December 31, 2015 273,948 2,381,486 $ 18.36 8.1 $ 33,274 Options vested and expected to vest as of December 31, 2015 2,070,287 $ 18.28 8.0 $ 32,926 Exercisable as of December 31, 2015 870,911 $ 16.30 7.4 $ 15,558 The intrinsic values of outstanding, vested and exercisable options were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2015 of $34.16 per share. The total intrinsic values of options exercised as of December 31, 2015 , 2014 and 2013 of $4.6 million , $2.6 million and $0.04 million were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2015 , 2014 , and 2013 of $34.16 , $16.94 and $11.40 per share. The following table summarizes the stock option activity for the 2014 IN is as follows: Number of Number of Weighted Weighted Aggregate (In thousands) Shares reserved 325,000 — $ — — $ — Options granted (140,125 ) 140,125 $ 22.52 Restricted stock awards granted (43,375 ) 43,375 $ — Outstanding as of December 31, 2014 141,500 183,500 $ 22.52 $ — Additional shares reserved 500,000 Options granted (206,250 ) 206,250 $ 36.32 Restricted stock awards granted (34,375 ) 34,375 — Option forfeitures 29,531 (29,531 ) $ 22.97 Award forfeitures 9,843 (9,843 ) $ — Awards released — (30,532 ) $ — Traded for taxes 9,640 — $ — Outstanding as of December 31, 2015 449,889 354,219 $ 31.46 7.2 $ 1,300 Options vested and expected to vest as of December 31, 2015 314,221 $ 31.49 7.1 $ 1,281 Exercisable as of December 31, 2015 95,469 $ 22.77 0.9 $ 1,088 The following table summarizes information with respect to stock options outstanding and currently exercisable as of December 31, 2015 : Options Outstanding Options Exercisable Exercise Price Number of Options Weighted- Average Remaining Contractual Life (In Years) $0.45 - 6.60 76,838 4.3 76,231 $8.70 549,097 7.4 319,747 $8.85 - 16.10 249,223 8.3 95,345 $16.23 384,977 8.5 102,776 $16.46 - 22.97 264,953 6.2 101,164 $24.58 - 32.00 222,945 8.7 110,719 $32.22 430,822 8.4 158,762 $32.81 - 36.32 229,250 9.9 1,636 $37.69 10,000 9.9 — $39.57 2,000 9.9 — 2,420,105 966,380 The following table summarizes information with respect to restricted stock awards outstanding as of December 31, 2015 : Number of Weighted-Average Grant-Date Fair Value Aggregate (In thousands) Outstanding as of December 31, 2013 — $ — $ — Granted 255,825 29.47 — Vested — — — Forfeited (4,500 ) 26.89 — Outstanding as of December 31, 2014 251,325 $ 29.51 — Granted 203,711 21.55 — Vested (105,287 ) 27.79 — Forfeited (34,149 ) 22.77 — Outstanding as of December 31, 2015 315,600 $ 25.67 $ 10,781 Stock Options Granted to Employees and Non-employee Directors During the years ended December 31, 2015 , 2014 and 2013 , the Company granted stock options to employees and non-employee directors to purchase shares of common stock with a weighted-average grant date fair value of $22.70 , $29.31 and $8.23 per share. As of December 31, 2015 , 2014 and 2013 , there was total unrecognized compensation cost for outstanding stock options and restricted stock awards of $21.5 million , $19.1 million and $3.2 million to be recognized over a period of approximately 2.8 years , 3.0 years , and 3.2 years , respectively. The fair value of the employee and non-employee director stock options was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions: Year Ended December 31, 2015 2014 2013 Expected term (in years) 6.0 6.0 6.0 Expected volatility 62.2 % 57.4 % 59.1 % Risk-free interest rate 1.6 % 1.9 % 1.3 % Expected dividend rate 0.0 % 0.0 % 0.0 % Fair Value of Common Stock . The fair value of the shares of common stock is based on the Company's stock price. Prior to the IPO, the fair value of the shares of common stock underlying the stock options has historically been determined by the Board of Directors. Because there was no public market for the Company’s common stock, the Board of Directors has determined fair value of the common stock at the time of grant of the option by considering a number of objective and subjective factors including valuation of comparable companies, sales of convertible preferred stock to unrelated third parties, operating and financial performance, the lack of liquidity of capital stock, and general and industry specific economic outlook, amongst other factors. Expected Term . The expected term for employees and non-employee directors is based on the simplified method, as the Company’s stock options have the following characteristics: (i) granted at-the-money; (ii) exercisability is conditioned upon service through the vesting date; (iii) termination of service prior to vesting results in forfeiture; (iv) limited exercise period following termination of service; and (v) options are non-transferable and non-hedgeable, or “plain vanilla” options, and the Company has limited history of exercise data. The expected term for non-employees is based on the remaining contractual term. Expected Volatility . Since the Company was a private entity with no historical data regarding the volatility of its common stock, the expected volatility used is based on volatility of a group of similar entities. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available. Risk-Free Interest Rate . The risk-free interest rate is based on U.S. Treasury constant maturity rates with remaining terms similar to the expected term of the options. Expected Dividend Rate . The Company has never paid any dividends and does not plan to pay dividends in the foreseeable future, and, therefore, used an expected dividend rate of zero in the valuation model. Forfeitures. The Company is required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and record stock based compensation expense only for those awards that are expected to vest. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period that the estimates are revised. Stock Options Granted to Consultants During the year ended December 31, 2015 , the Company did not grant options to purchase shares of common stock to consultants; however, grants to consultants were made prior to 2015 and two employees converted to consultants during 2015. Stock-based compensation expense related to stock options granted to consultants (other than non-employee directors) is recognized as the stock options are earned. During the years ended December 31, 2014 and 2013 , the Company granted options to purchase 13,333 shares and 76,666 shares of common stock to consultants with a weighted-average exercise price of $15.45 and $8.74 per share. Stock-based compensation expense related to stock options granted to consultants is recognized as the stock options are earned. The Company believes that the fair value of the stock options is more reliably measurable than the fair value of services received. The fair value of the stock options vested is calculated at each reporting date using the Black-Scholes option pricing model with the following weighted-average assumptions: Year Ended December 31, 2015 2014 2013 Expected term (in years) 8.2 7.3 9.0 Expected volatility 73.0 % 56.1 % 58.8 % Risk-free interest rate 2.0 % 2.1 % 2.7 % Expected dividend rate 0.0 % 0.0 % 0.0 % 2014 Employee Stock Purchase Plan On January 22, 2014, the Company’s Board of Directors authorized the adoption of the 2014 Employee Stock Purchase Plan, or 2014 ESPP, which became effective after adoption and approval by the Company’s stockholders on January 23, 2014. The maximum number of shares of common stock that may be issued under the Company’s 2014 ESPP was initially 200,000 shares. The number of shares of common stock reserved for issuance under the Company’s 2014 ESPP will automatically increase on January 1 of each year, beginning on January 1, 2015 and ending on and including January 1, 2024, by the lesser of (i) 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (ii) 300,000 shares of common stock or (iii) such lesser number of shares of common stock as determined by the Company’s Board of Directors. Shares subject to purchase rights granted under the Company’s 2014 ESPP that terminate without having been exercised in full will return to the 2014 ESPP reserve and will not reduce the number of shares available for issuance under the Company’s 2014 ESPP. The 2014 ESPP is intended to qualify as an “employee stock purchase plan,” or ESPP, under Section 423 of the Internal Revenue Code of 1986 with the purpose of providing employees with an opportunity to purchase the Company’s common stock through accumulated payroll deductions. On January 1, 2015, the number of shares of common stock reserved for issuance under the Company’s 2014 Employee Stock Purchase Plan, or 2014 ESPP, automatically increased by 1% of the total number of shares of the Company’s capital stock outstanding on December 31, 2014, or 237,744 shares. As of December 31, 2015 , there were 396,660 shares available for issuance under the 2014 ESPP. For the year ended December 31, 2015 , the Company recorded stock-based compensation expense of $0.1 million and issued 15,745 shares of common stock to employees under the 2014 ESPP. The fair value of the option component of the shares purchased under the 2014 ESPP was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions: Year Ended December 31, 2015 2014 Expected term (in years) 0.5 0.5 Expected volatility 63.4 % 46.8 % Risk-free interest rate 0.2 % 0.1 % Expected dividend rate — % — % Fair Value of Common Stock . The fair value of the shares of common stock is based on the Company’s stock price. Expected Term . The expected term is based on the term of the purchase period under the 2014 ESPP. Expected Volatility . Since the Company was a private entity with little historical data regarding the volatility of its common stock, the expected volatility used is based on volatility of a group of similar entities. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available. Risk-Free Interest Rate . The risk-free interest rate is based on U.S. Treasury constant maturity treasury rates with remaining terms similar to the expected term. Expected Dividend Rate . The Company has never paid any dividends and does not plan to pay dividends in the foreseeable future, and, therefore, used an expected dividend rate of zero in the valuation model. Total Stock-Based Compensation Total stock-based compensation expense related to options, awards, and ESPP to employees and non-employees was allocated as follows (in thousands): Year Ended December 31, 2015 2014 2013 Research and development $ 6,511 $ 2,357 $ 194 General and administrative 5,877 4,173 354 Total stock-based compensation expense $ 12,388 $ 6,530 $ 548 There were no capitalized stock-based compensation costs or recognized stock-based compensation tax benefits during the years ended December 31, 2015 , 2014 , and 2013 . On October 31, 2015, the Company entered into a separation agreement with one of its employees, pursuant to which the Company agreed to accelerate vesting of a portion of the employee’s outstanding stock options and restricted stock awards. As the employee would have forfeited the unvested awards upon termination under the awards’ original terms, the awards would not be expected to vest under the original service conditions. The acceleration in vesting of the unvested awards resulted in a Type III modification, which occurs when there is a change from an improbable to probable vesting condition. The Company recognized the incremental fair value, which was equal to the fair value of the awards on the modification date, and recognized the stock-based compensation over the remaining requisite service period. During the year ended December 31, 2015, the Company recorded $2.4 million of stock-based compensation expense in connection with this modification. |