Quarterly report pursuant to Section 13 or 15(d)

Stock Plans

Stock Plans

3 Months Ended

Mar. 31, 2016

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, 2016 and 2015:

	Three Months Ended
	March 31,
(in thousands, except per share amounts)	2016		2015
Research and development	$	132	$	203
General and administrative		200		288

Total stock-based compensation expenses	$	332	$	491

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, 2016 and 2015:

	Three Months Ended
	March 31,
	2016			2015
Weighted-average risk-free interest rate		1.53	%		1.8	%
Expected dividend payments		—			—
Expected holding period (years)¹		6.5			6.4
Weighted-average volatility factor²		0.92			1.61
Estimated forfeiture rates for options granted³		29	%		30	%

(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 approximately 168,000 and approximately 250,000 common shares were granted during the three month periods ended March 31, 2016 and 2015, respectively.

The following table summarizes option activity for the three month period ended March 31, 2016:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Option		Intrinsic
(in thousands, except per share amounts)	Options		Price		Term		Value
Outstanding at January 1, 2016		1,883	$	5.83		5.14	$	388
Granted		168		5.10
Exercised		—		—
Expired or cancelled		(17)		7.70
Forfeited		—		—

Outstanding at March 31, 2016		2,034	$	5.75		6.38	$	642

Exercisable at March 31, 2016		1,532	$	5.97		5.27	$	642

No shares of restricted stock were awarded to employees, directors and consultants during the three month periods ended March 31, 2016 and 2015.

As of March 31, 2016, there was approximately $1,245,000 of total unrecognized compensation expense related to non-vested stock options. This expense is expected to be recognized over a weighted-average period of approximately 1.6 years.