In April 2014, the Company adopted the Corbus Pharmaceuticals Holdings, Inc. 2014 Equity Incentive Plan (the “2014 Plan”). Pursuant to the 2014 Plan, the Company’s Board of Directors may grant incentive and nonqualified stock options and restricted stock to employees, officers, directors, consultants and advisors. Options issued under the 2014 Plan generally vest over 4 years from the date of grant in multiple tranches and are exercisable for up to 10 years from the date of issuance.

Pursuant to the terms of an annual evergreen provision in the 2014 Plan, the number of shares of common stock available for issuance under the 2014 Plan shall automatically increase on January 1 of each year by at least seven percent (7%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, or, pursuant to the terms of the 2014 Plan, in any year, the Board of Directors may determine that such increase will provide for a lesser number of shares.

In accordance with the terms of the 2014 Plan, effective as of January 1, 2019, the number of shares of common stock available for issuance under the 2014 Plan increased by 3,000,000 shares, which was less than seven percent (7%) of the outstanding shares of common stock on December 31, 2018. As of January 1, 2019, the 2014 Plan had a total reserve of 18,543,739 shares and there were 8,072,241 shares available for future grants. As of June 30, 2019, there were 5,200,795 shares available for future grants.

In accordance with the terms of the 2014 Plan, effective as of January 1, 2020, the number of shares of common stock available for issuance under the 2014 Plan increased by 4,527,103 shares, which was seven percent (7%) of the outstanding shares of common stock on December 31, 2019. As of January 1, 2020, the 2014 Plan had a total reserve of 23,070,842 shares and there were 8,840,939 shares available for future grants. As of June 30, 2020 there were 5,512,150 shares available for future grants.

Stock-based Compensation

For stock options issued and outstanding for the three months ended June 30, 2020 and 2019, respectively, the Company recorded non-cash, stock-based compensation expense of $3,348,360 and $2,817,488, net of estimated forfeitures. For stock options issued and outstanding for the six months ended June 30, 2020 and 2019, respectively, the Company recorded non-cash, stock-based compensation expense of $6,485,779 and $5,906,427, respectively, net of estimated forfeitures.

The fair value of each option award for employees is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. Due to its limited operating history, the Company estimates its volatility including the volatility of comparable public companies and its own common stock, taking into account the expected life of the option. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercises and employee terminations in order to estimate its forfeiture rate. The expected term of options granted under the 2014 Plan, all of which qualify as “plain vanilla” per SEC Staff Accounting Bulletin 107, is determined based on the simplified method due to the Company’s limited operating history, and is 6.25 years based on the average between the vesting period and the contractual life of the option. For non-employee options, the expected term is the contractual term. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option.

The weighted average assumptions used principally in determining the fair value of options granted to employees were as follows:

Summary of Fair Value of Options Granted to Employees

A summary of option activity for the six months ended June 30, 2020 and is presented below:

Summary of Option Activity 

The weighted average grant-date fair value of options granted during the six months ended June 30, 2020 and 2019 was $3.44 and $5.41 per share, respectively. The aggregate intrinsic value of options exercised during the six months ended June 30, 2020 and 2019 was approximately $1,030,994 and $233,095, respectively. The total fair value of options that were vested as of June 30, 2020 and 2019 was $31,198,928 and $19,252,762, respectively. As of June 30, 2020, there was approximately $26,300,051 of total unrecognized compensation expense, related to non-vested share-based option compensation arrangements. The unrecognized compensation expense is estimated to be recognized over a period of 2.69 years as of June 30, 2020.