Stockholders' Equity | Note 7. Stockholders’ Equity Capital Structure As of December 31, 2014, the Company was authorized to issue 14,689,000 shares of common stock at $0.0001 par value per share. In April 2015, the Company’s board of directors and stockholders approved an increase of the Company’s authorized shares of common stock to 22,033,500 shares. In connection with the close of the Company’s IPO on November 24, 2015, the Company’s stockholders approved an amended and restated certificate of incorporation increasing the number of authorized shares of common stock to 150,000,000 and the number of authorized shares of preferred stock to 10,000,000, par value $0.0001 per share. In November 2015, the Company completed its IPO, whereby it sold 5,666,667 shares of common stock at a public offering price of $9.00 per share. The Company received gross proceeds of approximately $51.0 million and net proceeds of approximately $45.5 million, after deducting underwriting discounts and commissions and offering-related transaction costs. In March 2017, the Company completed an underwritten public offering, whereby it sold 4,304,813 shares of common stock at a public offering price of $3.74 per share. The Company received gross proceeds of approximately $16.1 million and net proceeds of approximately $14.8 million, net of underwriting discounts and offering expenses. In October 2017, the Company entered into the Sales Agreement with Leerink , pursuant to which the Company may sell up to $30 million in shares of its common stock from time to time through Leerink, acting as its sales agent, in one or more at-the-market offerings. The Company received approximately $4.2 million in gross proceeds, of which net proceeds were approximately $4.1 million from the sales of its common stock to Leerink under the Sales Agreement during the year ended December 31, 2018. In January 2019, the Company raised approximately $25.8 million in gross proceeds through the sale of 3,164,015 shares under the Sales Agreement. Upon completion of the final sale, the Sales Agreement was automatically terminated, Leerink received a commission of 3.0% of the gross proceeds for all shares sold under the Sales Agreement. In December 2017, the Company completed the Registered Direct Offering, whereby it sold an aggregate of $9.5 million worth of units (“Units”) at a purchase price of $5.325 per Unit with each Unit consisting of (i) one share of the Company’s common stock, and (ii) a Common Warrant at an exercise price equal to $5.25 per share. The Company sold an aggregate of 1,783,587 Units for gross proceeds of approximately $9.5 million and net proceeds of approximately $8.8 million, net of underwriting discounts and offering expenses. Additionally, the Company issued 107,015 Placement Agent Warrants. The Company incurred issuance costs associated with the Units offering of $745,856, which included $81,000 related to issuance of 107,015 Placement Agent Warrants, of which, $583,768 was allocated to the common stock sold and was recorded as a reduction to equity. The remaining amount was allocated to the Common Warrants and was expensed. The Placement Agent Warrants have the same terms as the Common Warrants, except for the exercise price of $6.6562 per share. The Common Warrants priced at $5.25 and Placement Agent Warrants priced at $6.6562 utilized the 2016 Shelf Registration Statement for a total of $9.4 million and $712,313. On September 27, 2018, the Company entered into a purchase agreement with certain institutional and accredited investors (collectively, the “RDO Investors”) for the sale by the Company directly to the RDO Investors of an aggregate of 2,966,667 shares of the Company’s common stock, at a purchase price of $3.00 per share (the “2018 Registered Direct Offering”), for gross proceeds of approximately $8.9 million. The 2018 Registered Direct Offering closed on October 1, 2018, and the Company received net proceeds of approximately $8.8 million, after deducting transaction expenses. The 2,966,667 shares of common stock sold in the 2018 Registered Direct Offering were offered and sold by the Company directly to the RDO Investors, without a placement agent, underwriter, broker or dealer, pursuant to a prospectus supplement to the 2016 Shelf Registration Statement. The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors. Shelf Registration Statement On December 1, 2016, the Company filed a shelf registration statement with the Securities and Exchange Commission (“SEC”) for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $150.0 million, which the Company refers to as the 2016 Shelf Registration Statement. On December 16, 2016, the 2016 Shelf Registration Statement was declared effective by the SEC. The 2016 Shelf Registration Statement is currently our only active shelf registration. After deducting shares already sold, there is approximately $77.5 million of common stock that remains available for sale under the 2016 Shelf Registration as of the date of this filing. In the future, the Company may also periodically offer one or more of these securities in amounts, prices and terms to be announced when and if the securities are offered. At the time any of the securities covered by the 2016 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering. Equity Incentive Plans The Company had granted stock options under its 2013 Equity Compensation Plan (the "2013 Plan"), which was adopted for employees and consultants for the purpose of advancing the interests of the Company's stockholders by enhancing its ability to attract, retain and motivate persons who are expected to make important contributions to the Company. In November 2015, t he 2015 Omnibus Incentive Compensation Plan (the “2015 Plan”) was adopted by the Company’s stockholders . The 2015 Plan is the successor to the Company's 2013 Plan. In conjunction with the adoption of the 2015 Plan, no additional grants were made from the 2013 Plan and options from the 2013 Plan remain outstanding. As of December 31, 2018, there were 3,609,552 shares available for future grant under the 2015 Plan. Stock Options The following table summarizes stock option activity as of December 31, 2018: Weighted Weighted average Aggregate Number average contractual intrinsic of shares exercise price term value Outstanding at December 31, 2017 2,315,638 $ 5.57 Granted 816,723 3.12 Exercised (278,925) 1.36 Forfeited (325,835) 5.79 Expired (236,438) 6.70 Outstanding at December 31, 2018 2,291,163 $ 5.06 7.8 $ 216,649 Vested and expected to vest at December 31, 2018 2,265,994 $ 5.09 7.7 $ 195,112 Exercisable at December 31, 2018 1,317,299 $ 5.37 6.8 $ 191,115 The fair value of each stock option grant is estimated on the date of grant using the Black‑Scholes option pricing model. The expected term of the Company’s stock options has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock‑based compensation. The simplified method was chosen because the Company has limited historical option exercise experience due to its short operating history. The risk‑free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Expected volatility is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the Company’s expected term assumption. The relevant data used to determine the value of the stock option grants for the years ended December 31, 2018, 2017, and 2016 is as follows: Black-Scholes option valuation assumptions 2018 2017 2016 Risk-free interest rates 2.0 - 3.1 % 1.6 - 2.2 % 0.9 - 2.0 % Dividend yield — — — Volatility - 87 % - 77 % - 75 % Weighted average expected term 3.66 - 6.13 years 3.50 - 6.12 years - 6.25 years The weighted average grant date fair value of options granted was $1.99, $3.06, and $5.13 per option for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, there was $2.7 million of total unrecognized compensation cost related to non‑vested stock options which is expected to be recognized over a weighted average period of 2.3 years. These amounts do not include 38,024 options outstanding as of December 31, 2018, which are performance‑based and vest upon the achievement of certain corporate milestones. The total intrinsic value of options exercised (the difference in the market price of the Company’s common stock on the exercise date and the price paid by the optionee to exercise the option) was approximately $0.5 million for the years ended December 31, 2018. Stock‑based compensation will be measured and recorded if and when it is probable that the milestone will occur. Stock‑based compensation expense recognized for the years ended December 31, 2018, 2017, and 2016 was as follows: 2018 2017 2016 Research and development $ 391,946 $ 613,629 $ 1,115,626 General and administrative 1,363,028 1,458,581 915,792 Total $ 1,754,974 $ 2,072,210 $ 2,031,418 Performance‑Based Awards During the year ended December 31, 2018, the Company issued 19,000 performance-based awards at an exercise price of $2.18, to employees that vest upon completion of certain clinical events. During the year ended December 31, 2017, the Company issued 20,650 performance-based awards, with a weighted average exercise price of $5.70, to employees that vest upon completion of certain clinical events. For awards granted to employees with performance conditions, no expense will be recognized, and no measurement date can occur, until the occurrence of the event is probable. For awards granted to non‑employees, the Company will recognize the lowest aggregate amount within the range of potential values as expense until the measurement date is established. For the years ended December 31, 2018, 2017, and 2016, the Company recognized $1,587, $59,424, and $604,866, respectively, as expense related to performance‑based awards. |