Share-Based Compensation Plans. In May 2011, we adopted the Neurocrine Biosciences, Inc. 2011 Equity Incentive Plan, as amended, or the 2011 Plan, pursuant to which 21 million shares of our common stock are authorized for issuance. The 2011 Plan provides for the grant of stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory stock options, restricted stock awards, restricted stock unit awards, or RSUs, stock appreciation rights, performance stock awards, performance-based restricted stock units, or PRSUs, and other forms of equity compensation. In May 2018, we adopted the Neurocrine Biosciences, Inc. ESPP pursuant to which 300,000 shares of our common stock are authorized for issuance. During 2019, we issued 78,000 shares of our common stock under the ESPP. No purchases occurred under the ESPP during 2018.

We previously issued stock options and RSUs under the Neurocrine Biosciences, Inc. Inducement Plan, or the Inducement Plan, to certain employees. Pursuant to the Inducement Plan, we granted 70,000 stock options and 20,000 RSUs in 2018 and 410,000 stock options and 12,500 RSUs in 2017. We did not grant any stock options or RSUs pursuant to the Inducement Plan during 2019. These stock option grants have a four-year vesting period and the RSUs generally have vesting periods of three to four years. We currently have a total of 211,000 stock options and RSUs outstanding under this Inducement Plan.

At December 31, 2019, 6.8 million shares of common stock remained available for the future grant of awards under the 2011 Plan. Only share awards made under the 2011 Plan that are subsequently cancelled due to forfeiture or expiration are returned to the share pool available for future grants.

We issue new shares upon the exercise of stock options, the issuance of stock bonus awards, and the vesting of RSUs and PRSUs. At December 31, 2019, 7.8 million shares of common stock were reserved for such issuances.

Vesting Provisions of Share-Based Compensation. Stock options generally have terms of ten years from the date of grant, and generally vest over a three to four-year period. The maximum contractual term for all options granted from the 2011 Plan is ten years. RSUs granted under the 2011 Plan generally have vesting periods of four years. PRSUs granted under the 2011 Plan vest based on the achievement of certain pre-defined Company-specific performance criteria and expire four to five years from the grant date.

Share-Based Compensation. The compensation cost that has been included in the statements of operations and comprehensive income (loss) for all share-based compensation arrangements is as follows:

	Year Ended December 31,
(in thousands)	2019		2018		2017
Sales, general and administrative expense	$	49,489	$	31,847	$	27,951
Research and development expense		25,773		26,221		14,571
Share-based compensation expense	$	75,262	$	58,068	$	42,522

Stock Options. The exercise price of our stock options granted is equal to the closing price of our common stock on the date of grant. The estimated fair value of each stock option award granted was determined on the date of grant using the Black-Scholes option-pricing valuation model with the following weighted-average assumptions for option grants:

	Year Ended December 31,
(in thousands)	2019	2018	2017
Risk-free interest rate	2.4%	2.5%	2.0%
Expected volatility of common stock	54.8%	59.5%	58.0%
Dividend yield	0.0%	0.0%	0.0%
Expected option term	5.4 years	4.7 years	5.7 years

We estimate the fair value of stock options using a Black-Scholes option-pricing model on the date of grant. The fair values of equity instruments are recognized and amortized on a straight-line basis over the requisite service period. The Black-Scholes option-pricing model incorporates various and highly sensitive assumptions including expected volatility, term and interest rates. The expected volatility is based on the historical volatility of our common stock over the most recent period commensurate with the estimated expected term of our 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 our employee stock options. We have never declared or paid dividends and has no plans to do so in the foreseeable future.

Our determination of fair value is affected by our stock price as well as a number of assumptions that require judgment. The weighted-average fair values of stock options granted during 2019, 2018 and 2017 estimated as of the grant date using the Black-Scholes option-pricing model, were $41.74, $43.42 and $25.11, respectively.

	Year Ended December 31,
	2019					2018					2017
(in thousands, except weighted average data)	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at January 1		5,746		$	41.38		6,356		$	28.83		6,112		$	20.01
Granted		1,416			82.27		1,040			84.97		1,807			46.55
Exercised		(983	)		27.95		(1,592	)		18.95		(1,353	)		10.41
Canceled		(72	)		75.09		(58	)		64.67		(210	)		43.05
Outstanding at December 31		6,107		$	52.62		5,746		$	41.38		6,356		$	28.83

Stock options outstanding at December 31, 2019 had a weighted average remaining contractual term of 6.7 years.

For 2019, 2018 and 2017 share-based compensation expense related to stock options was $36.5 million, $35.4 million and $28.2 million, respectively. At December 31, 2019, there was approximately $75.0 million of unamortized compensation cost related to stock options, which we expect to recognize over a weighted average remaining vesting period of approximately 2.4 years. At

December 31, 2019, there were approximately 4.0 million stock options exercisable with a weighted average exercise price of $41.01 and a weighted-average remaining contractual term of 5.8 years. The total intrinsic value, which is the amount by which the exercise price was exceeded by the sale price of our common stock on the date of sale, of stock option exercises during 2019, 2018, and 2017 was $64.3 million, $117.0 million and $61.4 million, respectively. At December 31, 2019, the total intrinsic value of stock options outstanding and exercisable was $335.7 million and $268.2 million, respectively. Cash received from stock option exercises for 2019, 2018 and 2017 was $27.3 million, $29.5 million, and $13.9 million, respectively.

Restricted Stock Units. The fair value of RSUs is based on the closing sale price of our common stock on the date of issuance. For 2019, 2018, and 2017 share-based compensation expense related to RSUs was $30.4 million, $21.9 million, and $13.9 million, respectively. As of December 31, 2019, there was approximately $75.5 million of unamortized compensation cost related to RSUs, which is expected to be recognized over a weighted average remaining vesting period of approximately 2.4 years.

The total intrinsic value of RSUs converted into common shares for 2019, 2018 and 2017 was $36.1 million, $35.5 million, and $14.9 million, respectively. The RSUs, at the election of eligible employees, may be subject to deferred delivery arrangement. The total intrinsic value of RSUs outstanding at December 31, 2019 was $147.2 million based on our closing stock price on that date.

	Year Ended December 31,
	2019					2018					2017
(in thousands, except weighted average data)	Number of Units			Weighted Average Grant Date Fair Value per Unit		Number of Units			Weighted Average Grant Date Fair Value per Unit		Number of Units			Weighted Average Grant Date Fair Value per Unit
Outstanding at January 1		1,133		$	62.31		1,080		$	40.30		883		$	29.33
Granted		707			82.66		540			85.29		588			47.21
Cancelled		(56	)		74.49		(58	)		36.21		(41	)		40.62
Converted into common shares		(416	)		54.30		(429	)		59.23		(350	)		24.19
Outstanding at December 31		1,368		$	74.77		1,133		$	62.31		1,080		$	40.30

Performance-Based Restricted Stock Units. We had 0.3 million PRSUs outstanding at both December 31, 2019 and 2018. During 2018, we granted approximately 0.2 million PRSUs that vest based on the achievement of certain pre-defined Neurocrine-specific performance criteria and expire approximately four to five years from the grant date. No PRSUs were granted during 2019 or 2017. The fair value of PRSUs is estimated based on the closing sale price of our common stock on the date of grant. Expense recognition for PRSUs commences when attainment of the performance-based criteria is determined to be probable. We recognized expense of $5.6 million for 2019 and $0.4 million for 2017 related to PRSUs. We recognized no expense related to PRSUs for 2018. At December 31, 2019, total unrecognized estimated compensation expense related to PRSUs was $14.1 million and the total intrinsic value of PRSUs outstanding was $35.5 million based on our closing stock price on that date. The total intrinsic value of PRSUs converted into common shares was $8.8 million for 2017.

Employee Stock Purchase Plan. Under the ESPP, eligible employees may purchase shares of our common stock at a discount semi-annually based on a percentage of their annual compensation. The discounted purchase price is equal to the lower of 85% of (i) the market value per share of the common stock on the first day of the offering period or (ii) the market value per share of common stock on the purchase date. Share-based compensation expense recognized under the ESPP was $2.7 million for 2019 and $0.8 million for 2018.