12. Equity and Stock-Based Compensation

Public Offering of Common Stock

On July 3, 2017, the Company completed a public offering in which 2,807,017 shares of its common stock were sold to the public at a price of $42.75 per share. The underwriters were granted an option, which they exercised in full, to purchase an additional 421,052 shares of the Company’s common stock. The total proceeds from this offering, net of underwriting discounts, commissions and other offering expenses, totaled approximately $129.3 million.

Stock-Based Compensation

For the three-month periods ended September 30, 2017 and 2016, the Company recorded stock-based compensation expense of approximately $1,817,000 and $1,282,000, respectively, for share-based awards granted under the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan”) and the Repligen Corporation Amended and Restated 2012 Stock Option and Incentive Plan (the “2012 Plan,” and collectively with the 2001 Plan and the 1992 Repligen Corporation Stock Option Plan, the “Plans”). The Company recorded stock-based compensation expense of approximately $4,845,000 and $3,341,000 for the nine-month periods ended September 30, 2017 and 2016, respectively, for share-based awards granted under the Plans.

The following table presents stock-based compensation expense included in the Company’s consolidated statements of comprehensive income (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Cost of product revenue	$	197	$	116	$	491	$	260
Research and development		127		177		338		362
Selling, general and administrative		1,493		989		4,016		2,719

Total	$	1,817	$	1,282	$	4,845	$	3,341

The 2012 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Employee grants under the Plans generally vest over a three to five-year period, with 20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to non-employee directors under the Plans generally vest over one year. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At September 30, 2017, options to purchase 749,669 shares and 515,468 restricted stock units were outstanding under the Plans. At September 30, 2017, 1,228,987 shares were available for future grant under the 2012 Plan.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date, and the Company uses the value of the common stock as of the grant date to value restricted stock units. The Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award. The Company recognizes expense on awards with service based vesting over the employee’s requisite service period on a straight-line basis. In the third quarter of 2017, the Company issued performance stock units to certain individuals related to the Spectrum Acquisition which are tied to the achievement of certain revenue and gross margin metrics and the passage of time. The Company recognizes expense on performance based awards over the vesting period of each tranche when it is probable that the performance metrics will be achieved. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

Information regarding option activity for the nine-month period ended September 30, 2017 under the Plans is summarized below:


	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Options outstanding at December 31, 2016		882,748		$	16.88
Granted		101,844			33.38
Exercised		(201,966	)		10.08
Forfeited/cancelled		(32,957	)		20.31

Options outstanding at September 30, 2017		749,669		$	20.84		6.72	$	13,205

Options exercisable at September 30, 2017		423,217		$	15.86		5.53	$	9,602

Vested and expected to vest at September 30, 2017 ⁽¹⁾		739,381		$	20.74		6.70	$	13,065

⁽¹⁾

Represents the number of vested options as of September 30, 2017 plus the number of unvested options expected to vest as of September 30, 2017 based on the unvested outstanding options at September 30, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on September 30, 2017 of $38.32 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on September 30, 2017.

The weighted average grant date fair value of options granted during the nine-month periods ended September 30, 2017 and 2016 was $16.94 and $13.55, respectively. The total fair value of stock options that vested during the nine-month periods ended September 30, 2017 and 2016 was approximately $2,074,000 and $1,590,000, respectively.

Information regarding restricted stock unit and performance stock unit activity for the nine-month period ended September 30, 2017 under the Plans is summarized below:


	Units Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Restricted stock units outstanding at December 31, 2016		353,838		$	—
Granted		279,054			—
Exercised		(100,221	)		—
Forfeited/cancelled		(17,203	)		—

Restricted stock units outstanding at September 30, 2017		515,468		$	—		2.80	$	19,753

Vested and expected to vest at September 30, 2017 ⁽¹⁾		488,104		$	—		2.66	$	18,704

⁽¹⁾

Represents the number of vested restricted stock units as of September 30, 2017 plus the number of unvested restricted stock units expected to vest as of September 30, 2017 based on the unvested outstanding restricted stock units at September 30, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on September 30, 2017 of $38.32 per share) that would have been received by the restricted stock unit holders had all restricted stock units vested on September 30, 2017. The aggregate intrinsic value of restricted stock units vested during the nine-month periods ended September 30, 2017 and 2016 was approximately $3,480,000 and $1,479,000, respectively.

The weighted average grant date fair value of restricted stock units granted during the nine-month periods ended September 30, 2017 and 2016 was $36.85 and $26.28, respectively. The total grant date fair value of restricted stock units that vested during the nine-month periods ended September 30, 2017 and 2016 was approximately $2,565,000 and $1,315,000, respectively.

As of September 30, 2017, there was $18,114,000 of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 2.66 years.