Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.3.1.900
Stock-Based Compensation
6 Months Ended
Jan. 31, 2016
Stock-Based Compensation  
Stock-Based Compensation

Note 9— Stock-Based Compensation

 

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period, with the exception of options granted subject to a consulting agreement, whereby the option vesting period and the service period are defined pursuant to the terms of the consulting agreement. Stock-based compensation expense for awards granted during the three- and six- months period ended January 31, 2016 and 2015, were based on the grant date fair value estimated using the Black-Scholes Option Pricing Model. Share-based compensation expense related to stock option grants to consultants, in which the grant was not entirely vested at the grant date, are generally marked-to-market each month. The Company’s expected volatility is derived from the historical daily change in the market price of its common stock since it exited shell status and became available for trading, as well as the historical daily changes in the market price for the peer group as determined by the Company. The Company uses the simplified method to calculate the expected term of options issued to employees and directors. The Company’s estimation of the expected term for stock options granted to parties other than employees or directors is the contractual term of the option award. The risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield in effect at the time of grant, commensurate with the expected term. Stock-based compensation expense recognized in the Company’s condensed statements of operations is based on awards ultimately expected to vest, reduced for estimated forfeitures. Authoritative guidance requires forfeitures to be estimated at the time of grant, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Because the Company records stock-based compensation monthly and utilizes cliff vesting and/or monthly vesting, the Company has estimated the forfeiture rate of its outstanding stock options as zero since the Company can adjust stock-based compensation due to terminations in the month of termination. The Company has never paid any dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future.

 

During the three months ended January 31, 2016, the Company granted options to purchase 8,750 shares of the Company’s common stock to employees under the Company’s 2011 Stock Incentive Plan (as amended, the “2011 Plan”). The options issued have a ten-year term, vest over three years, and have exercise prices ranging from $3.44 to $4.29.

 

During the three months ended January 31, 2015, the Company granted options to purchase 21,250 shares of the Company’s common stock to employees under the 2011 Plan. The options issued have a ten-year term, vest over three years, and have exercise prices ranging from $7.80 to $10.60.

 

During the six months ended January 31, 2016, the Company granted options to purchase 2,052,250 shares of the Company’s common stock, of which 1,366,250 and 618,000 options were to employees and directors, respectively, and 68,000 options were to consultants under the 2011 Plan. The options issued to employees and directors have a ten-year term, vest over a range of one to three years, and have exercise prices ranging from $3.44 to $6.21. The options issued to consultants have three-year terms, vest in accordance with the terms of the applicable agreement, and have an exercise price of $5.76 per share.

 

During the six months ended January 31, 2015, the Company granted options to purchase 128,750 and 25,000 shares of the Company’s common stock to employees and consultants, respectively, under the 2011 Plan. The options issued to employees within the 2011 Plan have a ten-year term, vest over a range of one to three years, and have exercise prices ranging from $8.20 to $10.60. The options issued to consultants have one- to three-year terms, vest in accordance with the terms of the applicable consulting agreement, and have exercise prices ranging from $7.80 to $8.60.

 

The following assumptions were used to calculate the fair value of stock-based compensation during the three months ended January 31, 2016 and 2015:

 

 

 

January 31, 2016

 

January 31, 2015

 

Expected volatility

 

88.31% - 88.37

%

90.35%-91.86

%

Risk-free interest rate

 

1.58% - 2.01

%

1.31%-1.94

%

Expected forfeiture rate

 

0.00 

%

0.00 

%

Expected dividend yield

 

 

 

Expected term

 

5 - 6.5 years

 

5 - 6.5 years

 

 

The following assumptions were used to calculate the fair value of stock-based compensation during the six months ended January 31, 2016 and 2015:

 

 

 

January 31, 2016

 

January 31, 2015

 

Expected volatility

 

83.57% - 89.70

%

88.82%-93.11

%

Risk-free interest rate

 

0.86% - 2.01

%

0.36%-2.13

%

Expected forfeiture rate

 

0.00 

%

0.00 

%

Expected dividend yield

 

 

 

Expected term

 

2.6 - 6.5 years

 

2 - 6.5 years

 

 

Stock-based compensation expense recorded in the Company’s condensed statement of operations for the three- and six- months period ended January 31, 2016 resulting from stock-based compensation awarded to the Company’s employees, directors and consultants was approximately $1.5 million and $3.0 million, respectively.  Of this balance, $0.2 million and $0.5 million was recorded to research and development, respectively, and $1.3 million and $2.5 million, respectively, was recorded in general and administrative in the Company’s condensed statement of operations for the period ended January 31, 2016.

 

Stock-based compensation expense recorded in the Company’s condensed statement of operations for the three- and six- months period ended January 31, 2015 resulting from stock-based compensation awarded to the Company’s employees, directors and consultants was approximately $0.4 million and $1.0 million, respectively.  Of this balance, $0.2 million and $0.5 million was recorded to research and development, respectively, and $0.2 million and $0.5 million, respectively, was recorded in general and administrative in the Company’s condensed statement of operations for the period ended January 31, 2015

 

The weighted-average grant date fair value of stock options granted during the three- and six- months period ended January 31, 2016 and 2015 were $2.81 and $4.14, respectively, and $6.40 and $4.60, respectively.