9.	STOCK OPTIONS

In 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. On January 1, 2015, pursuant to an annual evergreen provision contained in the 2014 Plan, the number of shares reserved for future grants was increased by 1,815,683 shares. As of June 30, 2015, there was a total of 8,666,017 shares reserved for issuance under the 2014 plan and there were 4,829,135 shares available for future grants. Options issued under the 2014 Plan are exercisable for up to 10 years from the date of issuance.

Share-based Compensation

For stock options issued and outstanding for the three months and six months ended June 30, 2015 the Company recorded non-cash, stock-based compensation expense of $300,905 and $602,863, respectively, net of estimated forfeitures. For stock options issued and outstanding for the three and six months ended June 30, 2014, the Company recorded non-cash, stock-based compensation expense of $21,040, $26,412 respectively, net of forfeitures.

The fair value of each option award 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 and limited number of sales of its common stock, the Company estimated its volatility in consideration of a number of factors, including the volatility of comparable public companies and, commencing in 2015, the Company also considered the volatility of its own common stock. 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 within the valuation model. The expected term of options granted under the 2014 Plan, all of which qualify as “plain vanilla” per SEC Staff Accounting Bulletin 107, is based on the average of the 6.25 years. 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 assumptions used principally in determining the fair value of options granted were as follows:

 

		Six Months Ended June 30,
		2015				2014
Risk free interest rate			1.98	%			1.94	%
Expected dividend yield			0	%			0	%
Expected term in years			8.59				6.25
Expected volatility			97	%			91.59	%
Estimated forfeiture rate			0.65	%			20.00	%

 

A summary of option activity for the six months ended June 30, 2015 is presented below:

 

Options		Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term in Years				Intrinsic Value
Outstanding at December 31, 2014			3,556,691			$	0.83
Granted			192,500			$	2.91
Exercised			(33,021	)		$	0.11							$	95,108
Outstanding at June 30, 2015			3,716,170			$	0.95				8.49			$	7,949,972
Vested June 30, 2015			1,219,696			$	0.67				7.65			$	2,940,369

The weighted average grant-date fair value of options granted during the six months ended June 30, 2015 was $2.91 per share. As of June 30, 2015, there was approximately $1,787,899 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 3.22 years.