STOCK-BASED COMPENSATION

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



	Three Months Ended March 31,
	2019		2018
Research and development	$	4,306	$	3,033
Selling, general and administrative	8,223		6,272
Total stock-based compensation	$	12,529	$	9,305

We have several equity incentive plans under which we have granted stock options and restricted stock units (RSUs) to employees and directors. At March 31, 2019, 14,586,459 shares were available for grant under our equity incentive plans.

We used a Monte Carlo simulation pricing model to value stock options that include market vesting conditions and a Black-Scholes Merton option pricing model to value other stock options and ESPP purchases. The weighted average grant-date fair value per share of stock options and ESPP purchases were as follows:



	Three Months Ended March 31,
	2019		2018
Stock options	$	9.21	$	11.52
ESPP	$	4.67	$	7.39

The grant-date fair value of stock option grants and ESPP purchases was estimated using the following assumptions:



	Three Months Ended March 31,
	2019		2018
Stock options:
Risk-free interest rate	2.22	%	2.40	%
Dividend yield	—	%	—	%
Volatility	49	%	54	%
Expected life	4.0 years		4.0 years
ESPP:
Risk-free interest rate	2.48	%	1.53	%
Dividend yield	—	%	—	%
Volatility	57	%	53	%
Expected life	6 months		6 months

We considered our implied volatility and our historical volatility in developing our estimates of expected volatility. The assumptions for the expected life of stock options were based on historical exercise patterns and post-vesting termination behavior. The risk-free interest rate is based on U.S. Treasury rates with the same or similar term as the underlying award. Our dividend rate is based on historical experience and our investors’ current expectations.

The fair value of RSUs was based on the closing price of the underlying common stock on the date of grant.

Activity for stock options during the three months ended March 31, 2019 was as follows (dollars in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2018	22,674,062		$	8.71
Granted	246,820		$	22.94
Exercised	(1,413,766	)	$	4.91
Forfeited	(44,200	)	$	14.32
Expired	(22,925	)	$	22.12
Options outstanding at March 31, 2019	21,439,991		$	9.10	3.6 years	$	317,143
Exercisable at March 31, 2019	15,714,721		$	6.01	2.9 years	$	280,307

As of March 31, 2019, there was $44.1 million of unrecognized compensation expense related to our unvested stock options. The compensation expense for the unvested stock options will be recognized over a weighted-average period of 2.5 years.

Activity for RSUs during the three months ended March 31, 2019 was as follows (dollars in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2018	4,857,334		$	18.42
Awarded	123,410		$	22.94
Vested and released	(194,296	)	$	7.83
Forfeited	(100,630	)	$	18.13
RSUs outstanding at March 31, 2019	4,685,818		$	18.98	2.0 years	$	111,522

During 2018, in connection with our long-term incentive compensation program, we awarded 693,131 RSUs that will vest upon the achievement of certain product revenue, late-stage clinical development and pipeline expansion performance targets (PSUs). The PSUs were designed to drive the performance of our management team toward the achievement of key corporate objectives and will be forfeited if the performance targets are not met by December 31, 2021. Expense recognition for PSUs commences when it is determined that attainment of the performance goal is probable. As of March 31, 2019, we have not recognized any compensation expense related to these PSUs and the total unrecognized compensation expense was $12.7 million.

As of March 31, 2019, there was $77.0 million of unrecognized compensation expense related to our unvested RSUs, including the PSUs described above. The compensation expense for the unvested RSUs will be recognized over a weighted-average period of 2.9 years.