Stockholders' Equity (Deficit) | 9 Months Ended |
Sep. 30, 2014 |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity (Deficit) | ' |
6. Stockholders’ Equity (Deficit) |
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Initial Public Offering |
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On August 12, 2014, the Company completed its IPO, whereby the Company sold 5,980,000 shares of its common stock (inclusive of 780,000 shares of common stock sold by the Company pursuant to the full exercise of an overallotment option granted to the underwriters in connection with the offering) at a price of $11.00 per share. The shares began trading on the Nasdaq Global Market on August 7, 2014. The net proceeds received by the Company from the offering were approximately $58.0 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. At September 30, 2014, offering expenses related to the IPO totaling $2.1 million were incurred, but unpaid. Upon the closing of the IPO, all outstanding shares of redeemable convertible preferred stock converted into 12,516,298 shares of common stock and warrants exercisable for redeemable convertible preferred stock net exercised into 68,700 shares of common stock, resulting in a reclassification of the related liability for warrants to purchase redeemable convertible preferred stock to common stock (par value) and additional paid-in capital. On the conversion date, the redeemable convertible preferred stock had a balance of $117.4 million, which was recorded in temporary equity. Upon conversion into common stock, this balance was reclassified as stockholders’ equity, reducing accumulated deficit by $21.0 million, with the residual amount of $96.4 million recorded as common stock (par value) and additional paid-in capital. The amount recorded as a reduction in accumulated deficit reflects the value of redeemable convertible preferred stock dividends and issuance costs accreted through the conversion date. In addition, the following other items became effective with the closing of the IPO: |
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| (i) | | On July 25, 2014, the Company filed an amendment to the Certificate of Incorporation to effect the aforementioned stock split, increase the authorized number of shares of common stock from 29,880,899 to 60,000,000, eliminate anti-dilution protection for the preferred stock in the connection with the issuance of common stock as part of the IPO and amend the mandatory conversion provision to remove the minimum price per share and minimum gross proceeds conditions in connection with the IPO. Upon closing of the IPO, the number of authorized shares of common stock of the Company increased to 200,000,000 and the Company is authorized to issue up to 10,000,000 shares of preferred stock. | | | | | | | | | | |
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| (ii) | | On July 19, 2014, the Company’s board of directors adopted and, on July 21, 2014, the Company’s stockholders approved, the 2014 Incentive Award Plan (“2014 Plan”), which became effective on August 6, 2014. The 2014 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2014 Plan. | | | | | | | | | | |
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| (iii) | | On July 19, 2014, the Company’s board of directors adopted and, on July 21, 2014, the Company’s stockholders approved, the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which became effective on August 6, 2014. The 2014 ESPP will enable eligible employees to purchase shares of the Company’s common stock at a discount. | | | | | | | | | | |
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Stock-Based Compensation |
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2006 Stock Incentive Plan |
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The Company’s 2006 Stock Option Plan (“the 2006 Plan”) was established for granting stock incentive awards to directors, officers, employees and consultants to the Company. Upon closing of the Company’s IPO in August 2014, the Company ceased granting stock incentive awards under the 2006 Plan. The 2006 Plan provided for the grant of incentive and non-qualified stock options and restricted stock grants as determined by the Board of Directors. Under the 2006 Plan, stock options were generally granted with exercise prices equal to or greater than the fair value of the common stock as determined by the board of directors, expired no later than 10 years from the date of grant, and vest over various periods not exceeding 4 years. |
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2014 Stock Incentive Plan |
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The Company’s 2014 Plan provides for the issuance of shares of common stock in the form of stock options, awards of restricted stock, awards of restricted stock unit awards, performance awards, dividend equivalent awards, stock payment awards and stock appreciation rights to directors, officers, employees and consultants of the Company. Since the establishment of the 2014 Plan, the Company has only granted stock options. Generally, stock options are granted with exercise prices equal to or greater than the fair value of the common stock on the date of grant, expire no later than 10 years from the date of grant, and vest over various periods not exceeding 4 years. |
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The number of shares reserved for future issuance under the 2014 Plan is the sum of (1) 823,529, (2) any shares that were granted under the 2006 Plan which are forfeited, lapse unexercised or are settled in cash subsequent to the effective date of the 2014 Plan and (3) an annual increase on the first day of each calendar year beginning January 1, 2015 and ending on January 1, 2024, equal to the lesser of (A) 823,529 shares, (B) 4% of the shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (C) such smaller number of shares determined by the Board of Directors. As of September 30, 2014 there were 667,717 shares available for future grant under the Plan. |
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Stock Options |
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During the nine months ended September 30, 2014, the Company granted options with an aggregate fair value of $3,843,000, which are being amortized into compensation expense over the vesting period of the options as the services are being provided. The following is a summary of option activity under the Plans: |
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| | Number of | | Weighted-Average | | Weighted-Average | | Aggregate Intrinsic | | | | |
Shares | Exercise Price Per | Remaining | Value | | | |
| Share | Contractual Term | (In thousands) | | | |
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Outstanding at December 31, 2013 | | 2,265,973 | | $ | 2.53 | | 8.23 | | 11,510 | | | | |
Granted | | 672,972 | | 11.98 | | | | | | | | |
Exercised | | (63,602 | ) | 2.35 | | | | | | | | |
Cancelled | | (84,026 | ) | 2.44 | | | | | | | | |
Outstanding at September 30, 2014 | | 2,791,317 | | 4.82 | | 8.04 | | 37,039 | | | | |
Exercisable at September 30, 2014 | | 1,281,272 | | 2.24 | | 6.65 | | 20,303 | | | | |
Vested or expected to vest at September 30, 2014 | | 2,433,313 | | 4.59 | | 7.89 | | 32,850 | | | | |
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The total fair values of stock options that vested during the nine months ended September 30, 2014 was $812,000. |
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The weighted-average fair values of options granted in the nine-month periods ended September 30, 2014 and 2013 were $5.71 per share and $1.85 per share, respectively, and were calculated using the following estimated assumptions: |
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| | Nine Months Ended | | | | | | | | | |
September 30, | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | |
Weighted-average risk-free interest rate | | 1.85% - 2.04% | | 1.02% - 1.78% | | | | | | | | | |
Expected dividend yield | | 0.00% | | 0.00% | | | | | | | | | |
Expected volatility | | 60% - 62% | | 63% - 64% | | | | | | | | | |
Expected terms | | 5.75 - 6.08 years | | 5.77 - 6.08 years | | | | | | | | | |
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Employee Stock Purchase Plan |
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The 2014 ESPP provides initially for the granting of up to 220,588 shares of the Company’s common stock to eligible employees. The 2014 ESPP plan period is semi-annual and allows participants to purchase the Company’s common stock at 85% of the lower of (i) the market value per share of common stock on the first day of the offering period or (ii) the market value per share of the common stock on the purchase date. Each participant can purchase up to a maximum of $25,000 per year in fair market value, as determined by the market value per share of common stock at the beginning of the offering period. The first plan period began on August 7, 2014. Stock-based compensation expense from the 2014 ESPP for the three- and nine-months ended September 30, 2014 was $39,000. |
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Stock-Based Compensation Expense |
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The following table summarizes the stock-based compensation expense for stock options granted to employees and the and nonemployees, as well as stock-compensation expense for the 2014 ESPP that was recorded in the Company’s results of operations for the three and nine months ended September 30, 2014 and 2013 (in thousands): |
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| | Three Months | | Nine Months | |
Ended | Ended |
September 30, | September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 | |
Research and development | | $ | 127 | | $ | 37 | | $ | 250 | | $ | 117 | |
Selling, general and administrative | | 425 | | 76 | | 807 | | 223 | |
Total stock-based compensation expense | | $ | 552 | | $ | 113 | | $ | 1,057 | | $ | 340 | |
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As of September 30, 2014, there was $3,889,000 of total unrecognized compensation cost related to non-vested stock options granted under the 2006 and 2014 Plans. Total unrecognized compensation cost will be adjusted for future changes in the estimated forfeiture rate. The Company expects to recognize that cost over a remaining weighted-average period of 3.2 years as of September 30, 2014. |
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