5. SHARE-BASED COMPENSATION

The compensation expense related to the Company’s share-based compensation arrangements has been included in the condensed consolidated statements of comprehensive loss as follows (in millions):


	Three Months Ended March 31,
	2017		2016
General and administrative	$	5.5	$	4.1
Research and development		3.5		2.8

Total share-based compensation expense	$	9.0	$	6.9

The fair value of equity instruments that vest based on continued employee service is recognized and amortized on a straight-line basis over the requisite service period. For restricted stock units (RSUs) with performance-based vesting requirements (PRSUs), no expense is recorded until the performance condition is probable of being achieved.

As of March 31, 2017, total unrecognized estimated compensation cost related to non-vested stock options and non-vested RSUs, that vest over a given service period, granted prior to that date was $57.5 million and $32.1 million, respectively, which is expected to be recognized over a weighted average period of approximately 3.1 years. Additionally, the Company has approximately 0.4 million PRSUs outstanding. As of March 31, 2017, total unrecognized estimated compensation cost related to these PRSUs was $7.5 million and is recognized over the expected performance period once the achievement of performance conditions becomes probable.

During the three months ended March 31, 2017 and 2016, stock options to purchase approximately 0.3 million and 26,000 shares of the Company’s common stock were exercised, respectively. The cash received by the Company from stock option exercises during the three months ended March 31, 2017 and 2016 was approximately $1.5 million and $0.1 million, respectively. The Company also issued approximately 0.3 million shares of common stock pursuant to the vesting of RSUs during each of the three months ended March 31, 2017 and 2016.

Stock Option Assumptions

The Company granted stock options to purchase approximately 1.4 million and 0.7 million shares of the Company’s common stock during the three months ended March 31, 2017 and 2016, respectively. These stock options generally vest monthly over a four-year period. The exercise price of all stock options granted during the three months ended March 31, 2017 and 2016 was equal to the closing price of the Company’s common stock on the date of grant. The estimated fair value of each stock option granted was determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the stock option grants:


	Three Months Ended March 31,
	2017			2016
Risk-free interest rate		2.0	%		1.4	%
Expected volatility of common stock		58.1	%		60.0	%
Dividend yield		0.0	%		0.0	%
Expected option term		5.8 years			5.6 years

The Black-Scholes option-pricing model incorporates various and highly sensitive assumptions including expected volatility, expected term and interest rates. The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options. The expected option term is estimated based on historical experience as well as the status of the employee. For example, directors and officers have a longer expected option term than all other employees. The risk-free rate for periods within the contractual life of the option is based upon observed interest rates appropriate for the expected term of the Company’s employee stock options. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. For the three months ended March 31, 2017 and 2016, share-based compensation expense related to stock options was $5.7 million and $4.4 million, respectively.

Restricted Stock Units

During the three months ended March 31, 2017 and 2016, the Company granted approximately 0.4 million and 0.3 million RSUs, respectively, that vest annually over a four year period. Additionally, during the three months ended March 31, 2016, the Company granted approximately 0.2 million PRSUs. These PRSUs vest based on the achievement of pre-defined Company-specific performance criteria and expire approximately four to five years from the grant date. Expense recognition for PRSUs commences when attainment of the performance based criteria is probable. The fair value of RSUs and PRSUs is estimated based on the closing sale price of the Company’s common stock on the date of grant. For the three months ended March 31, 2017 and 2016, the aggregate share-based compensation expense related to RSUs and PRSUs was $3.3 million and $2.5 million, respectively.