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Stock award plan

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

11. 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, 2020, awards for 941,381 shares of common stock were available for issuance under the 2013 Long Term Incentive Plan.

In January 2020, the Company’s Board of Directors approved the 2020 Inducement Stock Incentive Plan. The 2020 Inducement Stock Incentive Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards and other stock-based awards, initially up to an aggregate of 1,000,000 shares of common stock. Any grants made under the 2020 Inducement Stock Incentive Plan must be made pursuant to the Nasdaq Listing Rule 5635(c)(4) inducement grant exception as a material component of the Company’s new hires’ employment compensation. In December 2020, the Company’s Board of Directors approved an additional 1,000,000 shares of common stock that may be issued under the 2020 Inducement Stock Incentive Plan. As of December 31, 2020, awards for 1,186,005 shares of common stock are available for issuance under the 2020 Inducement Stock Incentive Plan.

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 four-year period.

Inducement stock option awards

Pursuant to the Nasdaq inducement grant exception, during the year ended December 31, 2020, the Company issued options to purchase an aggregate of 740,350 shares of common stock to certain new hire employees at a weighted-average exercise price of $51.33 per share. Additionally, during the year ended December 31, 2020, the Company issued 73,645 restricted stock units under the 2020 Inducement Stock Incentive Plan. An aggregate of 357,052 of options previously granted as inducement awards were forfeited during the year ended December 31, 2020 in connection with employee separations from the Company.

A summary of stock option activity is as follows:


				Weighted-
		Weighted-		average		Aggregate
		average		remaining		intrinsic
	Number of	exercise		contractual		value(in
	options	price		term		thousands)

Outstanding at December 31, 2017	6,448,642	$	29.00
Granted	3,181,623	$	26.64
Exercised	(633,973)	$	18.61
Forfeited	(461,934)	$	35.36
Outstanding at December 31, 2018	8,534,358	$	28.58
Granted	3,977,995	$	35.81
Exercised	(949,887)	$	19.25
Forfeited	(518,527)	$	35.27
Outstanding at December 31, 2019	11,043,939	$	31.67
Granted	2,777,975	$	51.06
Exercised	(3,268,452)	$	24.25
Forfeited/Cancelled	(889,785)	$	42.14
Outstanding at December 31, 2020	9,663,677	$	38.72	7.37	years	$	218,374
Vested or Expected to vest at December 31, 2020	4,910,488	$	41.24	8.49	years	$	97,320
Exercisable at December 31, 2020	4,249,063	$	35.24	5.92	years	$	112,228

The fair values of grants made in the years ended December 31, 2020, 2019 and 2018 were contemporaneously estimated on the date of grant using the following assumptions:



	2020	2019	2018
Risk-free interest rate	0.34% - 1.45%	1.58% - 2.63%	2.25% - 3.10%
Expected volatility	87% - 89%	62% - 92%	64% - 90%
Expected term	5.75 years	5.75 - 6.11 years	5.03 - 10.00 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, 2020, 2019 and 2018 was $36.94, $23.05, and $17.48 per share, respectively.

Restricted Stock Awards and Restricted Stock Units—Restricted stock awards and Restricted stock units 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 awards and units:


	Restricted Stock Awards and Units
		Weighted
		Average
		Grant
	Number of	Date
	Shares	Fair Value
Unvested at December 31, 2019	642,419	$	24.50
Granted	663,045	$	51.32
Vested	(232,975)	$	23.87
Forfeited	(90,431)	$	36.44
Unvested at December 31, 2020	982,058	$	41.78

Stock Appreciation Rights—Stock appreciation rights (SARs) entitle the holder to receive, upon exercise, an amount of the Company’s common stock or cash (or a combination thereof) determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of the Company’s common stock over the measurement price based on the exercise date.

In May 2016, a total of 897,290 SARs were granted to non-executive employees (the 2016 SARs). The 2016 SARs vested annually in equal installments over four years and were settled in cash on each vest date, which required the Company to remeasure the SARs at each reporting period until vesting occurs. For the period ending December 31,2020, a total of 132,136 SARS vested. The last payment of the SARS liability was made in the three month period ended March 31, 2020, and accordingly, the balance of the SARS liability as of December 31, 2020 was $0.

Employee Stock Purchase Plan—In June 2016, the Company established an Employee Stock Purchase Plan (ESPP or the Plan) for certain eligible employees. The Plan is administered by the Company’s Board of Directors or a committee appointed by the Board. The total number of shares available for purchase under the Plan is one million shares of the Company’s common stock. Employees may participate over a six-month period through payroll withholdings and may purchase, at the end of the six-month period, the Company’s common stock at a purchase price of at least 85% of the closing price of a share of the Company’s common stock on the first business day of the offering period or the closing price of a share of the Company’s common stock on the last business day of the offering period, whichever is lower. No participant will be granted a right to purchase the Company’s common stock under the Plan if such participant would own more than 5% of the total combined voting power of the Company or any subsidiary of the Company after such purchase. For the period ending December 31, 2020, the Company recorded $1.9 million in compensation expense related to the ESPP.

The Company recorded share-based compensation expense in the statement of operations related to incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units and the ESPP as follows:


	Year ended December 31,
	2020		2019		2018
Research and development	$	38,716	$	20,836	$	16,096
Selling, general and administrative		31,609		21,298		17,156
Total	$	70,325	$	42,134	$	33,252

As of December 31, 2020, there was approximately $159.0 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 2.73 years.