8. Stockholders’ Equity

Option activity under our stock-based compensation plans during the three months ended March 31, 2015 was as follows (in thousands except per share amounts):

	Shares Underlying Outstanding Options (in thousands)			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2014		1,820		$	27.48
Options granted		619			16.30
Options exercised		(2	)		10.22
Options cancelled:
Options forfeited (unvested)		(54	)		17.88
Options cancelled (vested)		(70	)		48.75
Balance at March 31, 2015		2,313			24.06		6.94	$	8,276
Vested and expected to vest at March 31, 2015		2,313			24.06		6.94	$	8,276
Exercisable at March 31, 2015		1,126			30.20		4.55	$	2,298

Restricted stock unit activity under our stock-based compensation plans during the three months ended March 31, 2015 was as follows (in thousands except per share amounts):

	Number of Shares (In thousands)			Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2014		179		$	17.13
Granted		24		$	16.16
Vested		(3	)	$	16.90
Forfeited or expired		(5	)	$	18.80
Non-vested as of March 31, 2015		195		$	16.97

The aggregate intrinsic value of the restricted stock units outstanding as of March 31, 2015, based on our stock price on that date, was $4.4 million.

As of March 31, 2015, approximately 75,000 shares underlying stock options and restricted stock units awards with performance-based vesting criteria were outstanding.

Under our stock-based compensation plans, option awards generally vest over a four-year period contingent upon continuous service and expire ten years from the date of grant (or earlier upon termination of continuous service). The fair value-based measurement of each option is estimated on the date of grant using the Black-Scholes option valuation model.

The fair value-based measurements and weighted-average assumptions used in the calculations of these measurements are as follows:

	Stock Options						Employee Stock Purchase Plan
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2015			2014			2015			2014
Weighted-average fair value	$	10.85		$	15.70		$	17.32		$	9.20
Risk-free interest rate		1.6	%		1.8	%		0.4	%		0.2	%
Expected life (in years)		5.8			5.9			1.2			1.1
Volatility		0.8			1.4			2.4			0.9

We recognized stock-based compensation expense of $2.0 million and $1.3 million for the three months ended March 31, 2015 and 2014, respectively. The components of stock-based compensation expense were (in thousands):

	Three Months Ended
	March 31,
	2015		2014
Research and development	$	885	$	692
General and administrative		1,069		578
Total	$	1,954	$	1,270

As of March 31, 2015, the total unrecognized compensation cost related to non-vested equity awards including all awards with time-based vesting amounted to $19.8 million, which is expected to be recognized over the remaining weighted-average vesting period of 3.08 years. Additionally, as of March 31, 2015, the total unrecognized compensation cost related to equity awards with performance-based vesting criteria not deemed probable of vesting amounted to $0.4 million.

Employee Stock Purchase Plan

As of March 31, 2015, 99,600 shares were approved for issuance under the 2004 Employee Stock Purchase Plan, subject to adjustment for a stock split, or any future stock dividend or other similar change in our common stock or capital structure. As of March 31, 2015, employees have acquired 94,410 shares of our common stock under the 2004 Employee Stock Purchase Plan. As of March 31, 2015, 5,190 shares of our common stock remained available for future purchases.

In May 2014, stockholders of the Company approved the 2014 Employee Stock Purchase Plan (the “Purchase Plan”), pursuant to which the Company may issue up to 50,000 shares of its common stock to its employees. The Purchase Plan provides for the purchase of common stock by eligible employees and became effective on May 28, 2014. The purchase price per share is the lesser of (i) 85% of the fair market value of the common stock on the commencement of the offer period (generally, the fifteenth day in February or August) or (ii) 85% of the fair market value of the common stock on the exercise date, which is the last day of a purchase period (generally, the fourteenth day in February or August). As of March 31, 2015, employees have acquired 7,959 shares of our common stock under the Purchase Plan and 42,041 shares of our common stock remained available for future purchases.

Warrants

As of March 31, 2015, warrants to purchase an aggregate of approximately 1,060,000 shares of our common stock were outstanding. The warrants are exercisable at a weighted average price of $15 per share and have an expiration date of April 16, 2015. During the three months ended March 31, 2015, approximately 19,900 warrants were exercised resulting in the issuance of approximately 7,500 shares of our common stock.

Between April 1, 2015 and April 16, 2015 approximately 1,060,000 warrants were exercised resulting in the issuance of 375,000 shares of our common stock. No warrants remained outstanding as of April 16, 2015.

Preferred Stock Outstanding

As of March 31, 2015, there were 5,000,000 shares of preferred stock authorized and 17,430 shares of $0.001 par value Series B Convertible Preferred Stock outstanding. On February 26, 2015, 26,000 shares of our Series B Convertible Preferred Stock were converted into 2,600,000 shares of common stock.

Each share of Series B Convertible Preferred Stock is convertible into 100 shares of common stock at any time at the holder’s option. However, the holder is prohibited from converting the Series B Convertible Preferred Stock into shares of common stock if, as a result of such conversion, the holder and its affiliates would own more than 9.98% of the total number of shares of common stock then issued and outstanding. In the event of the Company’s liquidation, dissolution, or winding up, holders of Series B Convertible Preferred Stock will receive a payment equal to $0.001 per share before any proceeds are distributed to the common stockholders. Shares of Series B Convertible Preferred Stock generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series B Convertible Preferred Stock is required to amend the terms of the Series B Convertible Preferred Stock. Holders of Series B Convertible Preferred Stock are not entitled to receive any dividends, unless and until specifically declared by the Company’s board of directors. The Series B Convertible Preferred Stock ranks senior to the Company’s common stock as to distributions of assets upon the Company’s liquidation, dissolution or winding up, whether voluntarily or involuntarily. The Series B Convertible Preferred Stock may rank senior to, on parity with or junior to any class or series of the Company’s capital stock created in the future depending upon the specific terms of such future stock issuance.