| Stock-Based Compensation |
NOTE 7 – STOCK-BASED COMPENSATION
The following table summarizes option-based
compensation expense for the three and nine months ended September 30, 2019 and 2018:
| |
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
| |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
| Research and development |
|
$ |
972,000 |
|
|
$ |
1,012,000 |
|
|
$ |
3,013,000 |
|
|
$ |
2,756,000 |
|
| General and administrative |
|
|
854,000 |
|
|
|
1,487,000 |
|
|
|
2,594,000 |
|
|
|
4,316,000 |
|
| Stock-based compensation expense included in operating expense |
|
|
1,826,000 |
|
|
|
2,499,000 |
|
|
|
5,607,000 |
|
|
|
7,072,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total stock-based compensation expense |
|
|
1,826,000 |
|
|
|
2,499,000 |
|
|
|
5,607,000 |
|
|
|
7,072,000 |
|
| Tax benefit |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Stock-based compensation expense, net of tax |
|
$ |
1,826,000 |
|
|
$ |
2,499,000 |
|
|
$ |
5,607,000 |
|
|
$ |
7,072,000 |
|
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:
| |
● |
Expected volatility – we estimate the volatility of our share price at the date of grant using a “look-back” period which coincides 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. |
| |
● |
Expected term – we estimate the expected term using the “simplified” method, as outlined in Staff Accounting Bulletin No. 107, “Share-Based Payment.” |
| |
● |
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. |
| |
● |
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. |
We used the following weighted-average assumptions
to estimate the fair value of the options granted for the periods indicated:
| |
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
| |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
| Expected volatility |
|
|
103 |
% |
|
|
109 |
% |
|
|
108 |
% |
|
|
109 |
% |
| Expected term |
|
|
6.25 years |
|
|
|
5.00 years |
|
|
|
5.09 years |
|
|
|
5.00 years |
|
| Risk-free interest rate |
|
|
1.83 |
% |
|
|
2.78 |
% |
|
|
2.21 |
% |
|
|
2.54 |
% |
| Expected dividend yield |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
The following table summarizes the options
granted for the periods indicated:
| |
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
| |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
| Options granted |
|
|
105,600 |
|
|
|
157,000 |
|
|
|
1,490,490 |
|
|
|
1,026,800 |
|
| Weighted-average: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercise price |
|
$ |
2.58 |
|
|
$ |
14.45 |
|
|
$ |
6.53 |
|
|
$ |
14.38 |
|
| Grant date fair value |
|
$ |
2.09 |
|
|
$ |
11.44 |
|
|
$ |
5.14 |
|
|
$ |
11.36 |
|
The following table summarizes restricted common
stock-based compensation expense for the three and nine months ended September 30, 2019 and 2018:
| |
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
| |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
| Research and development |
|
$ |
66,000 |
|
|
$ |
- |
|
|
$ |
66,000 |
|
|
$ |
- |
|
| General and administrative |
|
|
32,000 |
|
|
|
172,000 |
|
|
|
282,000 |
|
|
|
516,000 |
|
| Stock-based compensation expense included in operating expense |
|
|
98,000 |
|
|
|
172,000 |
|
|
|
348,000 |
|
|
|
516,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total stock-based compensation expense |
|
|
98,000 |
|
|
|
172,000 |
|
|
|
348,000 |
|
|
|
516,000 |
|
| Tax benefit |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Stock-based compensation expense, net of tax |
|
$ |
98,000 |
|
|
$ |
172,000 |
|
|
$ |
348,000 |
|
|
$ |
516,000 |
|
We granted 376,625 shares of restricted common
stock to employees during the three and nine months ended September 30, 2019. We did not grant any restricted common stock to
employees during the three and nine months ended September 30, 2018.
|