Quarterly report pursuant to Section 13 or 15(d)

Stock Plans

Stock Plans

3 Months Ended

Mar. 31, 2015

2. Stock Plans

The following table summarizes the stock-based compensation expense recorded for awards under the stock option plans for the three month periods ended March 31, 2015 and 2014:

	Three Months Ended
	March 31,
(in thousands, except per share amounts)	2015		2014
Research and development	$	203	$	145
General and administrative		288		181

Total stock-based compensation expenses	$	491	$	326

No tax benefit was recognized related to stock-based compensation expense since we have incurred operating losses and we have established a full valuation allowance to offset all the potential tax benefits associated with our deferred tax assets.

We use the Black-Scholes-Merton option-pricing model with the following assumptions to estimate the stock-based compensation expense for the three month period ended March 31, 2015 and 2014:

	Three Months Ended
	March 31,
	2015			2014
Weighted-average risk-free interest rate		1.8	%		2.0	%
Expected dividend payments		—			—
Expected holding period (years)¹		6.4			6.5
Weighted-average volatility factor²		1.61			1.66
Estimated forfeiture rates for options granted³		30	%		31	%

(1)	Expected holding period is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and the expectations of future employee behavior.
(2)	Weighted average volatility is based on the historical volatility of our common stock.
(3)	Estimated forfeiture rates are based on historical data.

Options to purchase 1,374,000 and 275,000 common shares were granted during the three month periods ended March 31, 2015 and 2014, respectively.

The following table summarizes option activity for the three month period ended March 31, 2015:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Option		Intrinsic
(in thousands, except per share amounts)	Options		Price		Term		Value
Outstanding at January 1, 2015		6,620	$	1.23		5.14	$	1
Granted		1,374		0.60
Exercised		—		—
Expired or cancelled		(70)		2.62
Forfeited		—		—

Outstanding at March 31, 2015		7,924	$	1.11		5.82	$	178

Exercisable at March 31, 2015		7,250	$	1.15		5.43	$	97

No shares of restricted stock were awarded to employees, directors and consultants during the three month period ended March 31, 2015. 617,000 shares of restricted stock were awarded to employees, directors and consultants during the three month period ended March 31, 2014.

The following table summarizes restricted stock activity for the three month period ended March 31, 2015:

			Weighted		Weighted
			Average		Average		Aggregate
	Restricted		Exercise		Remaining		Intrinsic
(in thousands, except per share amounts)	Stock		Price		Term		Value
Outstanding at January 1, 2015		359	$	—		9.12	$	166
Granted		—		—
Released		(359)		—
Expired or cancelled		—		—
Forfeited		—		—

Outstanding at March 31, 2015		—	$	—		—	$	—

Exercisable at March 31, 2015		—	$	—		—	$	—

As of March 31, 2015, there was approximately $254,000 of total unrecognized compensation expense related to non-vested stock options and restricted stock. This expense is expected to be recognized over a weighted-average period of 0.9 years.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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