8.  Stock‑based compensation

 

Total compensation cost recognized for all stock‑based compensation awards in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):

 

 

Restricted Stock

 

From time to time, upon approval by the Company’s board of directors, certain employees and advisors have been granted restricted shares of common stock. These shares of restricted stock are subject to repurchase rights. Accordingly, the Company has recorded the proceeds from the issuance of restricted stock as a liability in the condensed consolidated balance sheets included as a component of accrued expenses or other long term liabilities based on the scheduled vesting dates. The restricted stock liability is reclassified into stockholders’ equity (deficit) as the restricted stock vests. A summary of the status of and changes in unvested restricted stock as of September 30, 2016 is as follows:

 

 

For the nine months ended September 30, 2016, the expense related to restricted stock awards granted to employees and non‑employees was $0 and $7.0 million, respectively. For the nine months ended September 30, 2015, the expense related to restricted stock awards granted to employees and non‑employees was $0 and $1.2 million, respectively.

 

As of September 30, 2016, the Company had no unrecognized stock‑based compensation expense related to its employee unvested restricted stock awards. As of September 30, 2016, the Company had unrecognized stock‑based compensation expense related to its non‑employee unvested restricted stock awards of $4.1 million which is expected to be recognized over the remaining weighted average vesting period of 0.8 years.

 

Stock Options

 

Certain of the Company’s stock option agreements allow for the exercise of unvested awards. During 2014, options to purchase 75,304 shares of common stock for $0.03 per share were exercised prior to their vesting. The unvested shares are subject to repurchase by the Company if the employees cease to provide service to the Company, with or without cause. As such, the Company does not treat the exercise of unvested options as a substantive exercise. The Company has recorded the proceeds from the exercise of unvested stock options as a liability in the condensed consolidated balance sheets as a component of accrued expenses or other long term liabilities based on the scheduled vesting dates. The liability for unvested common stock subject to repurchase is reclassified into stockholders’ equity (deficit) as the shares vest.

 

The following is a summary of stock option activity for the nine months ended September 30, 2016: 

 

 

The table above reflects unvested stock options as exercised on the dates that the shares are no longer subject to repurchase. The Company had 26,301 and 39,338 shares of unvested restricted common stock outstanding at September 30, 2016 and December 31, 2015, respectively, resulting from the exercise of unvested stock options.

 

Using the Black‑Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the three and nine months ended September 30, 2016 and 2015 was $15.01 and $4.71, respectively. The expense related to options granted to employees and directors was $4.0 million and $0.3 million for the nine months ended September 30, 2016 and 2015, respectively.

 

The fair value of each option issued to employees and directors was estimated at the date of grant using the Black‑Scholes option pricing model with the following weighted‑average assumptions:

 

 

There were 100,000 options granted to persons other than employees and directors during the nine months ended September 30, 2016. For the three and nine months ended September 30, 2016 and 2015, the fair value of each option issued to persons other than employees and directors was estimated at the date of grant using the Black‑Scholes option pricing model with the weighted‑average assumptions set forth in the table below:

 

 

As of September 30, 2016, the Company had unrecognized stock‑based compensation expense related to its employee stock options of $22.8 million which the Company expects to recognize over the remaining weighted average vesting period of 3.0 years.