

	Year Ended December 31,
	2019		2018		2017
Research and development	$	19,374	$	13,115	$	7,569
Selling, general and administrative	37,228		27,511		16,369
Total stock-based compensation	$	56,602	$	40,626	$	23,938

We have several equity incentive plans under which we granted stock options and RSUs, including PSOs and PSUs, to employees and directors. At December 31, 2019, 6,258,319 shares were available for grant under our equity incentive plans.

The Board of Directors (the Board) delegated responsibility for administration of our equity incentive plans to the Compensation Committee of the Board, including the authority to determine the term, exercise price and vesting requirements of each grant. Stock options granted to our employees and directors generally have a four-year vesting term and a one-year vesting term, respectively, an exercise price equal to the fair market value on the date of grant, and a seven-year life from the date of grant. Stock options issued prior to May 2011 have a ten-year life from the date of grant. RSUs granted to our employees and directors generally have a four-year vesting term and a one-year vesting term, respectively. PSUs and PSOs granted pursuant to our equity incentive plans vest upon the achievement of a performance target or market condition, respectively.

We have adopted a Change in Control and Severance Benefit Plan for certain executive officers. Eligible Change in Control and Severance Benefit Plan participants include employees with the title of vice president and above. If a participant’s employment is terminated without cause during a period commencing one month before and ending thirteen months following a change in control, as defined in the plan document, then the Change in Control and Severance Benefit Plan participant is entitled to have the vesting of all their outstanding equity awards accelerated and the exercise period for their stock options extended to no more than one year.

We have an ESPP that allows for qualified employees (as defined in the ESPP) to purchase shares of our common stock at a price equal to the lower of 85% of the closing price at the beginning of the offering period or 85% of the closing price at the end of each six month purchase period. Compensation expense related to our ESPP was $2.2 million, $2.2 million, and $1.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, we had 4,238,999 shares available for issuance under our ESPP. Pursuant to the ESPP, we issued 483,009, 330,492 and 434,523 shares of common stock at an average price per share of $12.60, $15.74 and $11.20 during the years ended December 31, 2019, 2018 and 2017, respectively. Cash received from purchases under the ESPP for the years ended December 31, 2019, 2018 and 2017 was $6.1 million, $5.2 million and $4.9 million, respectively.

We used a Monte Carlo simulation pricing model to value PSOs 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:



	Year Ended December 31,
	2019		2018		2017
Stock options, including PSOs:
Risk-free interest rate	1.77	%	2.81	%	1.98	%
Dividend yield	—	%	—	%	—	%
Volatility	48	%	55	%	59	%
Expected life	4.3 years		4.4 years		4.5 years
ESPP:
Risk-free interest rate	2.16	%	1.93	%	1.09	%
Dividend yield	—	%	—	%	—	%
Volatility	50	%	53	%	58	%
Expected life	6 months		6 months		6 months

We considered both implied and historical volatilities in developing our estimate of expected volatility. The assumption for the expected life of stock options is 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.



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at December 31, 2018	22,674		$	8.71
Granted	1,311		$	20.08
Exercised	(3,274	)	$	5.01
Forfeited	(217	)	$	16.89
Expired	(51	)	$	22.98
Stock options outstanding at December 31, 2019	20,443		$	9.91	3.2 years	$	169,299
Stock options exercisable at December 31, 2019	16,216		$	7.36	2.6 years	$	167,449

As of December 31, 2019, there was $33.7 million of unrecognized compensation expense related to our unvested stock options, including PSOs. The compensation expense for the unvested stock options will be recognized over a weighted-average period of 2.2 years.

During the year ended December 31, 2018, in connection with our long-term incentive compensation program, we granted 308,365 PSOs to our President and Chief Executive Officer. In addition to the standard service conditions included in our other stock options, these PSOs may not be exercised until, at any time after the grant date, the closing market price of a share of our Common Stock is equal to or greater than 125% of the per share exercise price of the PSO over a period of at least 30 consecutive calendar days. The stock-based compensation expense for the PSO is being recognized on an accelerated basis over the service period of the award, which commenced on the date of grant.

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between our closing stock price on the last trading day of fiscal 2019 and the exercise prices, multiplied by the number of in-the-money stock options) that would have been received by the stock option holders had all stock option holders exercised their stock options on December 31, 2019. The total intrinsic value of stock options exercised during the years ended December 31,

2019, 2018 and 2017 was $54.1 million, $39.1 million and $85.2 million, respectively. Cash received from stock option exercises during the years ended December 31, 2019, 2018 and 2017 was $16.4 million, $12.1 million and $17.6 million, respectively. The total estimated fair value of stock options vested and recorded as expense during the years ended December 31, 2019, 2018 and 2017 was $23.4 million, $18.9 million and $13.1 million, respectively.



	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2018	4,857		$	18.42
Awarded	5,842		$	19.46
Vested and released	(1,541	)	$	17.23
Forfeited	(357	)	$	18.66
RSUs outstanding at December 31, 2019	8,801		$	19.31	2.2 years	$	149,701

As of December 31, 2019, there was $158.0 million of unrecognized compensation expense related to our unvested RSUs, including PSUs. The compensation expense for the unvested RSUs will be recognized over a weighted-average period of 2.7 years.

During 2019, in connection with our long-term incentive compensation program, we awarded 1,926,605 PSUs (the target amount) that will vest upon the achievement of a performance target related to a product approval by the FDA (the 2019 PSUs); employees may earn 150% of the target amount, or an additional 963,136 shares relative to the target amount, if the performance target is achieved before December 31, 2020 and may earn 200% of the target amount, or up to an additional 1,926,605 shares relative to the target amount, if we receive a second product approval by December 31, 2021. During 2018 we awarded 693,131 PSUs that will vest upon the achievement of certain product revenue, late-stage clinical development programs and discovery pipeline expansion performance targets (the 2018 PSUs). The 2018 PSUs and 2019 PSUs were designed to drive the performance of our management team and employees 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 target is probable. During the year ended December 31, 2019, we achieved two of the performance targets for 281,238 of the 2018 PSUs and determined that it was probable that we would achieve one additional performance target for 99,281 additional 2018 PSUs. As a result, 141,004 of the 2018 PSUs have vested as of December 31, 2019 and the remainder are expected to vest over various dates through November 2021. We recognized $4.9 million in compensation expense related to those 2018 PSUs during the year ended December 31, 2019; the remaining unrecognized compensation expense for those 2018 PSUs was $2.1 million as of December 31, 2019. The total unrecognized compensation expense for both the 2019 PSUs and the remaining 2018 PSUs for which we have not yet determined that attainment of the performance target is probable was $80.2 million as of December 31, 2019.

We sponsor the 401(k) Plan under which we historically made matching contributions to our employees’ 401(k) accounts in the form of our common stock. We recorded compensation expense related to the stock match of $4.6 million, $3.6 million, and $1.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. Beginning in 2020, we will make matching contributions to our employees’ 401(k) accounts in cash.