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Stockholders' Equity
 3 Months Ended
Mar. 31, 2017
Stockholders' Equity  
Stockholders' Equity

 

Note 8.   Stockholders’ Equity

 

Common Stock and Warrants

 

As of March 31, 2017, the Company was authorized to issue 250 million shares of Common Stock. Dividends on Common Stock will be paid when, and if, declared by the board of directors. Each stockholder is entitled to vote on all matters that are appropriate for stockholder voting and is entitled to one vote for each share held.

 

As discussed in “—Note 7. Debt Instruments”, on December 21, 2016, the Company issued $250 million aggregate principal amount of Convertible Notes in a private offering. The Notes will mature on December 15, 2023, unless earlier repurchased, redeemed, or converted in accordance with their terms.  The Notes are convertible at the option of the holders, under certain circumstances and during certain periods, into cash, shares of the Company’s Common Stock or a combination thereof. Prior to the close of business on the business day immediately preceding September 15, 2023, the Notes are convertible at the option of the holders of the Notes only under certain conditions. On or after September 15, 2023, until the close of business on the second business day immediately preceding the maturity date, holders of the Notes may convert their Notes at their option at the conversion rate then in effect, irrespective of these conditions.  The Company will settle conversions of the Notes by paying or delivering, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock, at the Company’s election.  The conversion rate will initially be 163.3987 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $6.12 per share of Common Stock).  The conversion rate is subject to customary adjustments upon the occurrence of certain events.

 

Equity Incentive Plan

 

The Company’s Equity Incentive Plans consist of the Amended and Restated 2007 Equity Incentive Plan (the “Plan”) and the 2007 Director Option Plan (the “2007 Director Plan”). The Plan provides for the granting of restricted stock and options to purchase common stock in the Company to employees, advisors and consultants at a price to be determined by the Company’s board of directors. The Plan is intended to encourage ownership of stock by employees and consultants of the Company and to provide additional incentives for them to promote the success of the Company’s business. The 2007 Director Plan is intended to promote the recruiting and retention of highly qualified eligible directors and strengthen the commonality of interest between directors and stockholders by encouraging ownership of common stock of the Company. The Board of Directors, or its committee, is responsible for determining the individuals to be granted options, the number of options each individual will receive, the option price per share, and the exercise period of each option.

 

Stock Option Grants

 

The fair value of the stock options granted is estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

 

 

 

Three Months
Ended March 31,

 

 

 

2017

 

2016

 

Expected stock price volatility

 
83.2

%
81.2

%

Risk free interest rate

 
2.1

%
1.8

%

Expected life of options (years)

 
6.25

 
6.25

 

Expected annual dividend per share

 

$
0.00

 

$
0.00

 

 

A summary of the Company’s stock options for the three months ended March 31, 2017 is as follows:

 

 

 

Number of
Shares

 

Weighted
Average
Exercise Price

 

Weighted
Average
Remaining
Contractual Life

 

Aggregate
Intrinsic
Value

 

 

 

(in thousands)

 

 

 

 

 

(in millions)

 

Options outstanding, December 31, 2016

 
15,497.5

 

$
7.37

 

 

 

 

 

Granted

 
2,605.3

 

$
5.19

 

 

 

 

 

Exercised

 
(88.4

)

$
3.00

 

 

 

 

 

Forfeited

 
(192.6

)

$
9.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding, March 31, 2017

 
17,821.8

 

$
7.05

 

7.5 years

 

$
26.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested and unvested expected to vest, March 31, 2017

 
16,637.6

 

$
7.05

 

7.3  years

 

$

24.8 

 

Exercisable at March 31, 2017

 
8,564.0

 

$
6.80

 

5.9  years

 

$

15.7 

 

 

As of March 31, 2017, the total unrecognized compensation cost related to non-vested stock options granted was $37.2 million and is expected to be recognized over a weighted average period of 2.8 years.

 

Restricted Stock Units (“RSUs”) and Performance-Based Restricted Stock Units

 

RSUs awarded under the Plan are generally subject to graded vesting and are contingent on an employee’s continued service. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of Common Stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse.

 

A summary of non-vested RSU activity under the Plan for the three months ended March 31, 2017 is as follows:

 

 

 

Number of Share
(in thousands)

 

Weighted
Average Grant Date
Fair Value

 

Weighted
Average
Remaining Years

 

Aggregate
Intrinsic Value (in
millions)

 

Non-vested units as of December 31, 2016

 
744.4

 

$
7.86

 

 

 

 

 

Granted

 
2,308.1

 

$
5.64

 

 

 

 

 

Vested

 
(4.7

)

$
14.08

 

 

 

 

 

Forfeited

 
(25.9

)

$
5.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-vested units as of March 31, 2017

 
3,021.9

 

$
6.17

 
3

 

$
21.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On December 30, 2016, the Compensation Committee approved a form of Performance-Based Restricted Stock Unit Award Agreement (the “Performance-Based RSU Agreement”), to be used for performance-based RSUs granted to participants under the Amended and Restated Amicus Therapeutics, Inc. 2007 Equity Incentive Plan, including named executive officers. Certain awards under the form of Performance-Based RSU Agreement were granted in January 2017. The table above includes 401,413 market performance-based restricted stock units (“MPRSUs”) granted to executives.  Vesting of these awards is contingent upon the Company meeting certain total shareholder return (TSR) levels as compared to a select peer group over the next three years.  The MPRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% (802,826 shares) based on TSR performance.  The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term.  The estimated fair value per share of the MPRSUs was $8.08 and was calculated using a Monte Carlo simulation model.  The table above also includes 401,413 performance based awards that will vest over the next three years based on the Company achieving certain clinical milestones.

 

For the three months ended March 31, 2017, 4,680 of the RSUs vested and all non-vested units are expected to vest over their normal term. As of March 31, 2017, there was $13.4 million of total unrecognized compensation cost related to unvested RSUs with service-based vesting conditions. These costs are expected to be recognized over a weighted average period of 3 years.

 

Compensation Expense Related to Equity Awards

 

The following table summarizes information related to compensation expense recognized in the statements of operations related to the equity awards (in thousands):

 

 

 

Three Months Ended March
31,

 

 

 

2017

 

2016

 

Equity compensation expense recognized in:

 

 

 

 

 

Research and development expense

 

$
2,753

 

$
1,936

 

Selling, general and administrative expense

 
3,277

 
2,347

 

 

 

 

 

 

 

Total equity compensation expense

 

$
6,030

 

$
4,283