Achieve Life Sciences, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Common Stock (Tables)

Common Stock (Tables)

9 Months Ended

Sep. 30, 2016

Stock option transactions and the number of stock options outstanding are summarized below:

	Number of			Weighted
	Optioned			Average
	Common			Exercise
	Shares			Price
Balance, December 31, 2015		1,479,221		$	8.78
Granted		1,635,250			0.86
Expired		(16,520	)		7.25
Exercised		—			—
Forfeited		(123,996	)		5.35
Balance, September 30, 2016		2,973,955		$	4.58

Summary of Fair Value of Option Awards

The fair value of each stock award for employees and directors is estimated on the grant date and for consultants at each reporting period, using the Black-Scholes option-pricing model based on the weighted-average assumptions noted in the following table:

	Nine Months Ended
	September 30,
	2016			2015
Risk-free interest rates		1.51	%		1.74	%
Expected dividend yield		0	%		0	%
Expected life	5.3 years			5.8 years
Expected volatility		71.88	%		62.31	%

Summary of Share-Based Compensation Expense

The results for the periods set forth below included share-based compensation expense for stock options and restricted stock units in the following expense categories of the consolidated statements of loss (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016			2015		2016		2015
Research and development	$	(70	)	$	351	$	614	$	920
General and administrative	$	(64	)		361		639		1,020
Total stock-based compensation	$	(134	)	$	712	$	1,253	$	1,940

Summary of Restricted Stock Unit Award Activity

The following table summarizes our restricted stock unit award activity during the nine months ended September 30, 2016:

				Weighted
	Number			Average
	of			Grant Date
	Shares			Fair Value
Balance, December 31, 2015		640,759		$	4.92
Settled		(207,296	)		5.21
Forfeited or expired		(92,378	)		6.39
Balance, September 30, 2016		341,085		$	4.35

Summary of Outstanding Warrants

The following is a summary of outstanding warrants to purchase common stock at September 30, 2016:

	Total
	Outstanding		Exercise
	and		price per
	Exercisable		Share		Expiration Date
(1) Series A Warrants issued in July 2014 financing		2,779,933		4.00	July 2019
(2) Series B Warrants issued in July 2014 financing		670,269		4.00	July 2019
(3) Series A-1 Warrants issued in April 2015 financing		239,234		2.40	October 2020

Summary of Fair Value of Warrants Issued

The estimated fair value of warrants issued and classified as liabilities is reassessed at each reporting date using the Black-Scholes option pricing model.

	As of
	September 30,
Series A and Series B Warrant Valuation Assumptions	2016			2015
Risk-free interest rates		0.85	%		1.09	%
Expected dividend yield		0	%		0	%
Expected life	2.75 years			3.75 years
Expected volatility		100.97	%		70.15	%

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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