| STOCK-BASED COMPENSATION |
NOTE 7 – STOCK-BASED COMPENSATION
The following table summarizes stock-based option compensation for the three and six months ended June 30, 2019 and 2018:
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For the three months ended June 30,
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For the six months ended June 30,
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2019
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2018
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2019
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2018
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Research and development
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$
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1,009,000
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$
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900,000
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$
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2,041,000
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$
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1,744,000
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General and administrative
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669,000
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1,773,000
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1,740,000
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2,829,000
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Stock-based compensation expense included in operating expense
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1,678,000
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2,673,000
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3,781,000
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4,573,000
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Total stock-based compensation expense
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1,678,000
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2,673,000
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3,781,000
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4,573,000
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Tax benefit
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—
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—
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—
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—
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Stock-based compensation expense, net of tax
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$
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1,678,000
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$
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2,673,000
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$
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3,781,000
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$
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4,573,000
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We estimate the fair value of each option award on the date of grant using the Black-Scholes option valuation model. We then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:
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·
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Expected volatility – we estimate the volatility of our share price at the date of grant using a “look-back” period which coincided with the expected term, defined below. We believe using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility.
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·
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Expected term – we estimate the expected term using the “simplified” method, as outlined in Staff Accounting Bulletin No. 107, “Share-Based Payment.”
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·
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Risk-free interest rate – we estimate the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant.
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·
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Dividends – we use an expected dividend yield of zero because we have not declared or paid a cash dividend, nor do we have any plans to declare a dividend.
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We used the following weighted-average assumptions to estimate the fair value of the options granted for the periods indicated:
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For the three months ended June 30,
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For the six months ended June 30,
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2019
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2018
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2019
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2018
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Expected volatility
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108
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%
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109
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%
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108
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%
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109
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%
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Expected term
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5 years
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5 years
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5 years
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5 years
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Risk-free interest rate
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2.21
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%
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2.65
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%
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2.24
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%
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2.44
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%
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Expected dividend yield
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—
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%
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—
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%
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—
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%
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—
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%
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The following table summarizes the options granted for the periods indicated:
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For the three months ended
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For the six months ended
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June 30,
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June 30,
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2019
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2018
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2019
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2018
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Options granted
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1,183,890
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224,800
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1,384,890
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869,800
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Weighted-average:
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Exercise price
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$
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6.86
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$
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16.27
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$
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6.84
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$
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14.38
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Grant date fair value
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$
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5.39
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$
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12.87
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$
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5.37
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$
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11.36
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The following table summarizes restricted common stock compensation expense for the three and six months ended June 30, 2019 and 2018:
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For the three months ended June 30,
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For the six months ended June 30,
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2019
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2018
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2019
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2018
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Research and development
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$
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—
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$
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—
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$
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—
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$
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—
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General and administrative
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78,000
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172,000
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250,000
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344,000
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Stock-based compensation expense included in operating expense
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78,000
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172,000
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250,000
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344,000
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Total stock-based compensation expense
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78,000
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172,000
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250,000
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344,000
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Tax benefit
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—
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—
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—
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—
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Stock-based compensation expense, net of tax
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$
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78,000
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$
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172,000
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$
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250,000
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$
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344,000
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We did not grant any common stock to directors or employees during the three and six months ended June 30, 2019 or 2018.
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