9. Stock award plan

In 2009, the Company's shareholders approved the 2009 Equity and Long-Term Incentive Plan, which provides for the granting of stock option awards, restricted stock awards, and other stock-based and cash-based awards, subject to certain adjustments and annual increases.

On March 5, 2013, the Company's Board of Directors approved the 2013 Stock Incentive Plan, which provides for the granting of stock option awards, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards in the aggregate of 739,937 shares of common stock. On March 5, 2013, the Board approved a grant of 735,324 shares of restricted stock and 4,613 stock options. There are no additional shares available for issuance under this plan.

In May 2013, the Company's Board of Directors and stockholders increased by 2,500,000 the number of shares authorized under the 2009 Equity and Long Term Incentive Plan, which provides for the granting of stock option awards, restricted stock awards, and other stock-based and cash-based awards. There are no additional shares available for issuance under this plan.

In May 2013, the Company's Board of Directors and stockholders approved the 2013 Long Term Incentive Plan, which became effective upon the closing of the Company's IPO. The 2013 Long Term Incentive Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards and other stock-based awards. The number of shares of common stock reserved for issuance under the 2013 Long Term Incentive Plan is the sum of (1) 122,296 shares of common stock available for issuance under the Company's 2009 Equity and Long Term Incentive Plan and 2013 Stock Incentive Plan, (2) the number of shares (up to 3,040,444 shares) equal to the sum of the number of shares of common stock subject to outstanding awards under the Company's 1998 Employee, Director and Consultant Stock Option Plan, 2009 Equity and Long Term Incentive Plan and 2013 Stock Incentive Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right plus (3) an annual increase, to be added on the first day of each fiscal year until the expiration of the 2013 Long Term Incentive Plan, equal to the lowest of 2,500,000 shares of common stock, 4% of the number of shares of common stock outstanding on the first day of the fiscal year and an amount determined by the Company's Board of Directors. As of December 31, 2015, awards for 266,533 shares of common stock are available for issuance.

The Board of Directors has the authority to select the individuals to whom options are granted and determine the terms of each option, including (i) the number of shares of common stock subject to the option; (ii) the date on which the option becomes exercisable; (iii) the option exercise price, which, in the case of incentive stock options, must be at least 100% (110% in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company's stock) of the fair market value of the common stock as of the date of grant; and (iv) the duration of the option (which, in the case of incentive stock options, may not exceed ten years). Options typically vest over a three- or four-year period.

Inducement stock option awards

Pursuant to the NASDAQ inducement grant exception, during the year ended December 31, 2015, the Company issued options to purchase an aggregate of 806,600 shares of common stock to certain new hire employees at a weighted-average exercise price of $50.46 per share. An aggregate of 84,150 of these options were forfeited during the year ended December 31, 2015 in connection with employee separations from the Company.

A summary of stock option activity is as follows:

	Number of options			Weighted- average exercise price		Weighted- average remaining contractual term		Aggregate intrinsic value
								(in thousands)
Outstanding at December 31, 2012		42,394		$	474.00
Granted		2,117,113		$	11.29
Exercised		—		$	—
Forfeited		(63,915	)	$	12.57

Outstanding at December 31, 2013		2,095,592		$	20.24
Granted		1,639,996		$	31.09
Exercised		(108,645	)	$	11.00
Forfeited		(193,971	)	$	32.91

Outstanding at December 31, 2014		3,432,972		$	25.00
Granted		2,201,800		$	50.81
Exercised		(656,248	)	$	13.27
Forfeited		(152,047	)	$	49.58

Outstanding at December 31, 2015		4,826,477		$	37.20		8.38 years	$	32,391

Vested or Expected to vest at December 31, 2015		3,266,769		$	40.14		8.65 years	$	13,590

Exercisable at December 31, 2015		1,357,478		$	29.38		7.67 years	$	18,242

The fair values of grants made in the years ended December 31, 2015, 2014 and 2013 were contemporaneously estimated on the date of grant using the following assumptions:

	2015	2014	2013
Risk-free interest rate	1.48 - 2.18%	0.11 - 2.04%	0.85 - 1.90%
Expected volatility	67 - 69%	70 - 91%	87 - 89%
Expected term	5.50 - 9.12 years	5.50 - 6.25 years	6.00 - 6.25 years

The Company assumed no expected dividends for all grants. The weighted average grant date fair value of options granted during the years ended December 31, 2015, 2014 and 2013 was $50.81, $22.39, and $8.23 per share, respectively.

The Company uses the "simplified method" to determine the expected term of options. Under this method, the expected term represents the average of the vesting period and the contractual term. The expected volatility of share options was estimated based on a historical volatility analysis of peers that were similar to the Company with respect to industry, stage of life cycle, size, and financial leverage. The risk-free rate of the option is based on U.S. Government Securities Treasury Constant Maturities yields at the date of grant for a term similar to the expected term of the option.

In December 2013, the Compensation Committee of the Board of Directors modified the terms of stock options granted to executive management. Under the modified terms, the Committee waived all remaining performance conditions associated with the initial vesting of the options such that the options vest with service only conditions. The Company accounted for the modification to the option grants pursuant to ASC Topic 718-20-35 and recognized approximately $0.6 million as additional compensation that was charged to operations during the year ended December 31, 2013.

In 2014, the Company modified the terms of stock options granted to a departing member of the executive team. The Company accounted for the modification to the option grants pursuant to ASC Topic 718-20-35 and recognized approximately $1.9 million as additional compensation that was charged to operations during the year ended December 31, 2014.

Restricted Stock Awards—Restricted stock awards are granted subject to certain restrictions, including in some cases service conditions (restricted stock). The grant-date fair value of restricted stock awards, which has been determined based upon the market value of the Company's shares on the grant date, is expensed over the vesting period.

The following table summarizes information on the Company's restricted stock:

	Restricted Stock
	Number of Shares			Weighted Average Grant Date Fair Value
January 1, 2015		718,400		$	10.72
Granted		—		$	—
Vested		(361,919	)	$	10.60
Forfeited		(12,146	)	$	10.84

Unvested at December 31, 2015		344,335		$	10.85

The Company recorded share-based compensation expense in the statement of operations as follows:

	Year ended December 31,
	2015		2014		2013
Research and development	$	16,138	$	9,739	$	4,312
Selling, general and administrative		17,841		9,571		4,115

Total	$	33,979	$	19,310	$	8,427

As of December 31, 2015, there was approximately $73.8 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company's Plans. This cost is expected to be recognized as compensation expense over the weighted average remaining service period of approximately 2.74 years.