Stock-Based Compensation

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

We recorded and allocated employee stock-based compensation expense for our equity incentive plans and our 2000 Employee Stock Purchase Plan (“ESPP”) as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Research and development expense	$	1,600	$	1,165	$	3,078	$	6,729
Selling, general and administrative expense	3,427		2,393		6,662		8,014
Total stock-based compensation expense	$	5,027	$	3,558	$	9,740	$	14,743

We use the Black-Scholes Merton option pricing model to value our stock options and ESPP purchases. The weighted average grant-date fair value of our stock options and ESPP purchases was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Stock options	$	10.07	$	3.17	$	10.01	$	2.67
ESPP	$	5.65	$	1.60	$	4.61	$	1.79

The fair value of stock options and ESPP purchases was estimated using the following assumptions:



	Stock Options
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Risk-free interest rate	1.72	%	0.90	%	1.68	%	1.10	%
Dividend yield	—	%	—	%	—	%	—	%
Expected volatility	60	%	67	%	61	%	76	%
Expected life	4.3 years		4.4 years		4.2 years		4.4 years



	ESPP
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Risk-free interest rate	0.94	%	0.39	%	0.77	%	0.42	%
Dividend yield	—	%	—	%	—	%	—	%
Expected volatility	60	%	65	%	64	%	69	%
Expected life	6 months		6 months		6 months		6 months

We considered implied volatility as well as our historical volatility in developing our estimate of expected volatility. The expected life computation is based on historical exercise patterns and post-vesting termination behavior.

A summary of stock option activity for the six months ended June 30, 2017 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2016	24,999,665		$	4.91
Granted	674,110		$	20.57
Exercised	(3,242,026	)	$	4.04
Forfeited	(161,836	)	$	7.27
Options outstanding at June 30, 2017	22,269,913		$	5.50	4.25 years	$	426,081
Exercisable at June 30, 2017	16,181,093		$	4.13	3.72 years	$	331,770

As of June 30, 2017, a total of 24,237,774 shares were available for grant under our stock option plans.

A summary of restricted stock unit (“RSU”) activity for the six months ended June 30, 2017 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2016	2,469,791		$	8.69
Awarded	258,272		$	20.81
Vested and released	(280,657	)	$	4.24
Forfeited	(85,543	)	$	10.72
RSUs outstanding at June 30, 2017	2,361,863		$	10.47	1.72 years	$	58,173

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details