11. Subsequent Events

On July 6, 2016, the Company completed the IPO, in which the Company issued and sold 4,600,000 shares of its common stock at a public offering price of $12.50 per share, including 600,000 shares of common stock sold pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock, for aggregate gross proceeds of $57.5 million. The Company received approximately $49.9 million in net proceeds after deducting $7.6 million of underwriting discounts and commissions and other offering costs. Upon the closing of the IPO, all of the outstanding shares of convertible preferred stock automatically converted into 15,988,800 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding. In connection with the IPO, the Company amended and restated its Fourth Amended and Restated Certificate of Incorporation to change the authorized capital stock to 200,000,000 shares designated as common stock and 10,000,000 shares designated as preferred stock, all with a par value of $0.001 per share. The financial statements as of June 30, 2016, including share and per share amounts, do not give effect to the IPO, as it closed subsequent to June 30, 2016.

In July 2016, upon closing of the IPO, the Company recognized approximately $1.2 million of stock-based compensation expense associated with the vesting of 53,334 shares of restricted common stock and the vesting of performance-based option awards to purchase up to 59,387 shares of common stock.

The 2016 Employee Stock Purchase Plan (the “2016 ESPP”) was adopted by the board of directors on December 15, 2015 and approved by the stockholders on June 17, 2016 and became effective on July 6, 2016. The 2016 ESPP will be administered by the Company’s board of directors or by a committee appointed by the Company’s board of directors. The 2016 ESPP initially will provide participating employees with the opportunity to purchase up to an aggregate of 586,666 shares of the Company’s common stock. The number of shares of the Company’s common stock reserved for issuance under the 2016 ESPP will automatically increase on the first day of each fiscal year, commencing on January 1, 2017 and ending on December 31, 2025, in an amount equal to the least of (i) 1,173,333 shares of the Company’s common stock, (ii) 1.0% of the total number of shares of the Company’s common stock outstanding on the first day of the applicable year, and (iii) an amount determined by the Company’s board of directors.