Quarterly report pursuant to Section 13 or 15(d)

Stock Plans

Stock Plans

9 Months Ended

Sep. 30, 2019

2. Stock Plans

In January 2019, our stockholders approved an amendment to the Titan Pharmaceuticals, Inc. 2015 Omnibus Equity Incentive Plan to increase the number of shares authorized for awards thereunder from 583,334 to 1,666,667.

In January 2019, our stockholders approved a repricing of 122,115 fully-vested stock options with exercise prices in excess of $21.00 held by employees and consultants other than the named executive officers or members of the Board. The effected options were repriced at $1.55. As a result of the repricing of these stock options, we incurred a total of approximately $136,000 of additional stock-based compensation expense during the nine months ended September 30, 2019, of which approximately $77,000 was recorded within research and development and approximately $59,000 within selling, general and administrative in our condensed statement of operations and comprehensive loss.

The following table summarizes the stock-based compensation expense recorded for awards under our stock option plans (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Research and development	$	—	$	136	$	91	$	455
Selling, general and administrative		128		252		523		767
Total stock-based compensation	$	128	$	388	$	614	$	1,222

We use the Black-Scholes-Merton option-pricing model with the following assumptions to estimate the fair value of our stock options:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Weighted-average risk-free interest rate	—	%	2.9	%	2.2	%	2.7	%
Expected dividend payments	—		—		—		—
Expected holding period (years) 1	—		6.4		5.4		6.4
Weighted-average volatility factor 2	—		0.91		0.94		0.89
Estimated forfeiture rates for options granted 3	—	%	25	%	21	%	26	%

(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.

The following table summarizes option activity:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Option	Intrinsic
	Options (in	Price per		Term (in	Value (in
	thousands)	share		years)	thousands)
Outstanding at January 1, 2019	665	$	17.94	6.44	$	4.0
Granted	854		1.64
Cancelled	(274)		21.32
Outstanding at September 30, 2019	1,245		6.02	8.16		—
Exercisable at September 30, 2019	705		9.41	7.12

As of September 30, 2019, there was approximately $0.3 million of total unrecognized compensation expense related to non-vested stock options. This expense was expected to be recognized over a weighted-average period of approximately 1.7 years.