5.	Stockholders’ Equity

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

The Company recorded stock-based compensation expense of approximately $6,747,000, $4,595,000 and $3,598,000 for the years ended December 31, 2017, 2016 and 2015, respectively, for share-based awards granted under the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan”) and the Repligen Corporation 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 following table presents stock-based compensation expense in the Company’s consolidated statements of operations (in thousands):


	Years ended December 31,
	2017		2016		2015
Cost of product revenue	$	704	$	341	$	213
Research and development		481		537		336
Selling, general and administrative		5,562		3,717		3,049

Total	$	6,747	$	4,595	$	3,598

During 2016, the Company modified certain stock option grants for its former senior vice president of research and development in conjunction with his retirement. As part of the April 2016 transition agreement, all outstanding equity awards continued to vest through December 31, 2016, and fifty percent (50%) of the option awards that are unvested on February 28, 2017 immediately vested and became exercisable as of that date. As a result of these modifications to his share-based payment arrangements, the Company incurred stock compensation expense of $292,000 for the year ended December 31, 2016. This expense was recorded to research and development expense on the Company’s consolidated statement of operations.

During 2015, the Company modified certain stock option grants for its former president and chief executive officer in conjunction with his retirement. As part of the January 2015 transition agreement, all outstanding equity awards continued to vest through December 31, 2015, and fifty percent (50%) of the option awards that are unvested on December 31, 2015 immediately vested and became exercisable as of that date. As a result of these modifications to his share-based payment arrangements, the Company incurred stock compensation expense of $826,000 for the year ended December 31, 2015. This expense was recorded to selling, general and administrative expense on the Company’s consolidated statement of operations.

The 2012 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Incentive options granted to employees 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 and consultants 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 December 31, 2017, options to purchase 734,940 shares and 505,235 restricted stock units were outstanding under the Plans. At December 31, 2017, 1,220,915 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 share-based awards on the grant date. The fair value of share-based awards granted during the years ended December 31, 2017, 2016 and 2015 were calculated using the following estimated assumptions:


	2017	2016	2015
Expected term (years)	6.1	6.7 – 7.1	6.6 – 7.2
Volatility	51.48%	50.85 – 51.01%	50.09 – 51.89%
Risk-free interest rate	1.88 – 1.99%	1.51 – 2.37%	1.67 – 2.03%
Expected dividend yield	—	—	—

Information regarding option activity for the year ended December 31, 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		(215,495	)		10.92
Forfeited/cancelled		(34,157	)		20.23

Options outstanding at December 31, 2017		734,940		$	20.80		6.46	$	11,558

Options exercisable at December 31, 2017		420,688		$	15.86		5.28	$	8,720

Vested and expected to vest at December 31, 2017⁽¹⁾		727,278		$	20.71		6.44	$	11,472

(1)

Represents the number of vested options as of December 31, 2017 plus the number of unvested options expected to vest as of December 31, 2017 based on the unvested outstanding options at December 31, 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 December 29, 2017, the last business day of 2017, of $36.28 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 December 31, 2017. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2017, 2016 and 2015 was approximately $5,305,000, $5,043,000 and $3,638,000, respectively.

The weighted average grant date fair value of options granted during the years ended December 31, 2017, 2016 and 2015 was $16.94, $14.16 and $16.05, respectively. The total fair value of stock options that vested during the years ended December 31, 2017, 2016 and 2015 was approximately $2,220,000, $1,713,000 and $1,536,000, respectively.

Information regarding restricted stock unit activity for the year ended December 31, 2017 under the Plans is summarized below:


	Options Outstanding			Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Restricted stock units outstanding at December 31, 2016		353,838
Granted		293,004
Vested		(114,690	)
Forfeited/cancelled		(26,917	)

Restricted stock units outstanding at December 31, 2017		505,235			2.65	$	18,330

Vested and expected to vest at December 31, 2017⁽¹⁾		466,201			2.40	$	16,914

(1)

Represents the number of vested restricted stock units as of December 31, 2017 plus the number of unvested restricted stock units expected to vest as of December 31, 2017 based on the unvested outstanding restricted stock units at December 31, 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 December 29, 2017, the last business day of 2017, of $36.28 per share, as restricted stock units do not have an exercise price) that would have been received by the restricted stock unit holders had all holders exercised on December 31, 2017. The aggregate intrinsic value of restricted stock units vested during the years ended December 31, 2017, 2016 and 2015 was approximately $4,010,000, $1,671,000 and $1,304,000, respectively.

The weighted average grant date fair value of restricted stock units granted during the years ended December 31, 2017, 2016 and 2015 was $26.03, $27.25 and $29.07, respectively. The total fair value of restricted stock units that vested during the years ended December 31, 2017, 2016 and 2015 was approximately $4,010,000, $1,474,000 and $781,000, respectively.

As of December 31, 2017, there was $16,133,000 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 2.52 years. The Company expects 772,791 unvested options and restricted stock units to vest over the next five years.