6. STOCK‑BASED COMPENSATION

Total stock‑based compensation expense related to all of our stock‑based awards was as follows (in thousands):

 

 

In 2017 and 2016, we entered into severance agreements. As part of the severance arrangements we offered, we extended the date through which certain employee(s) had the right to exercise their vested options. In addition, we also accelerated the vesting period of certain unvested stock options. As a result of these modifications, we recorded an incremental stock-based compensation expense of approximately $1.4 million and $1.1 million during the years ended December 31, 2017 and 2016, respectively. The incremental compensation expenses were computed based on the fair values of the modified awards on the respective modification dates. These amounts are included as part of “Selling, general and administrative expense” in the accompanying 2017 Statement of Operations and “selling, general and administrative expense” and “Restructuring charges” in the accompanying 2016 Statement of Operations.

Employee Stock Option Plans

On May 16, 2018, our stockholders approved the adoption of the Company’s 2018 Equity Incentive Plan (2018 Plan). The 2018 Plan is the successor plan to the 2011 Equity Incentive Plan, the 2000 Equity Incentive Plan, and the 2000 Non-Employee Directors' Stock Option Plan. As of December 31, 2018, we have two stock option plans, our 2018 Plan and the Inducement Plan. The 2018 Plan provides for granting to our officers, directors and all other employees and consultants options to purchase shares of our common stock. The Inducement Plan is intended mainly to provide an inducement material for certain individuals to enter into employment with the Company.

 

Options granted under our 2018 Plan expire no later than 10 years from the date of grant. Options may be granted with different vesting terms from time to time. As of December 31, 2018, a total of 34,174,470 shares of common stock were authorized for issuance under the 2018 Plan. Options granted under our Inducement Plan expire no later than 10 years from the date of grant and may be granted with different vesting terms from time to time. As of December 31, 2018, a total of 1,635,875 shares of common stock were authorized for issuance under the Inducement Plan.

The fair value of each option award is estimated on the date of grant using the Black‑Scholes option pricing model. We have segregated option awards into the following three homogenous groups for the purposes of determining fair values of options: officers and directors, all other employees, and consultants. We account for forfeitures as they occur.

 

We determined weighted‑average valuation assumptions separately for each of these groups as follows:

 

The following table summarizes the weighted‑average assumptions relating to options granted pursuant to our equity incentive plans for the years ended December 31, 2018, 2017 and 2016:

 

 

The exercise price of stock options granted under our stock plans is equal to the fair market value of the underlying shares on the date of grant. Options become exercisable at varying dates and generally expire 10 years from the date of grant. At December 31, 2018, options to purchase 15,097,014 shares of common stock were available for grant and 20,713,331 reserved shares of common stock were available for future issuance under our stock option plans.

Stock‑Based Compensation Award Activity

Option activity under our equity incentive plans was as follows:

 

 

We granted options to purchase 4,594,225, 4,048,675 and 5,251,185 shares of common stock during the years ended December 31, 2018, 2017 and 2016, respectively. The weighted‑average grant date fair value of options granted during 2018, 2017 and 2016 was $2.66,  $1.48 and $1.72, respectively. As of December 31, 2018, we had 200,000 shares of outstanding performance-based stock option wherein the achievement of the corresponding corporate-based milestones were not considered as probable.  Accordingly, none of the stock-based compensation expense of $385,000 has been recognized as expense as of December 31, 2018.

 

As of December 31, 2018, there were approximately $10.9 million of unrecognized stock-based compensation cost related to time-based stock options and performance-based stock options, wherein achievement of the corresponding corporate-based milestones was considered as probable. Additionally, approximately $1.1 million of total unamortized stock-based compensation cost related to our Purchase Plan. The unamortized compensation costs related to our stock option plans and our Purchase Plan are expected to be recognized over a weighted‑ average period of approximately 2.6 years and 0.8 years, respectively. For the years ended December 31, 2018 and 2017, there were 2,924,823 and 2,844,690 shares vested, respectively, with weighted‑average exercise price of $2.88 and $2.86, respectively.

 

The aggregate intrinsic value of the stock options in the table above is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for the options that were in‑the‑money at December 31, 2018. At December 31, 2018 and 2017, we had 5,962,769 and 4,665,624, respectively, of nonvested stock options, with approximately $121,000 and $5.4 million intrinsic value at December 31, 2018 and 2017, respectively. During the years ended December 31, 2018 and 2017, aggregate intrinsic value of options exercised under our stock option plans was approximately $1.3 million and $1.2 million, respectively, determined as of the date of the stock option exercise.

 

Details of our stock options by exercise price are as follows as of December 31, 2018:

 

 

Employee Stock Purchase Plan

Our Purchase Plan permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. The price at which the stock is purchased is equal to the lesser of 85% of the fair market value of the common stock on the first day of the offering or 85% of the fair market value of our common stock on the purchase date. The initial offering period commenced on the effective date of our initial public offering. We issued 783,984,  403,302, and 482,746 shares of common stock during 2018, 2017 and 2016, respectively, pursuant to the Purchase Plan at an average price of $1.92,  $1.87 and $1.89, respectively. For 2018, 2017 and 2016, the weighted average fair value of awards granted under our Purchase Plan was $1.27,  $0.99 and $0.98, respectively. As of December 31, 2018, we had 1,331,584 reserved shares of common stock available for future issuance under the Purchase Plan.

The fair value of awards granted under our Purchase Plan is estimated on the date of grant using the Black‑Scholes option pricing model, which uses weighted‑ average assumptions. Our Purchase Plan provides for a 24- month offering period comprised of four six‑month purchase periods with a look‑back option. A look‑back option is a provision in our Purchase Plan under which eligible employees can purchase shares of our common stock at a price per share equal to the lesser of 85% of the fair market value on the first day of the offering period or 85% of the fair market value on the purchase date. Our Purchase Plan also includes a feature that provides for a new offering period to begin when the fair market value of our common stock on any purchase date during an offering period falls below the fair market value of our common stock on the first day of such offering period. This feature is called a “reset.” Participants are automatically enrolled in the new offering period. We had a “reset” on July 1, 2016 because the fair market value of our stock on June 30, 2016 was lower than the fair market value of our stock on January 5, 2015, the first day of the offering period. We applied modification accounting in accordance with ASC Topic No. 718, Stock Compensation, to determine the incremental fair value associated with this Purchase Plan “reset” and recognized the related stock‑based compensation expense according to FASB ASC Subtopic No. 718‑50, Employee Share Purchase Plans. The total incremental fair value associated with this Purchase Plan “reset” was approximately $1.0 million which was recognized as expense during the period from July 1, 2016 to June 30, 2018.  We had another “reset” on January 2, 2019 because the fair market value of our stock on December 31, 2018 was lower than the fair market value of our stock on July 1, 2018, the first day of the offering period. We applied modification accounting in accordance with the relevant accounting guidance.  The total incremental fair value associated with this Purchase Plan “reset” was approximately $879,000 and will be recognized as expense from the period from January 1, 2019 to December 31, 2020.

The following table summarizes the weighted‑average assumptions related to our Purchase Plan for the years ended December 31, 2018, 2017 and 2016. Expected volatilities for our Purchase Plan are based on the two‑year historical volatility of our stock. Expected term represents the weighted‑ average of the purchase periods within the offering period. The risk‑free interest rate for periods within the expected term is based on U.S. Treasury constant maturity rates.